Quotulatiousness

October 15, 2014

QotD: The value of economics

Filed under: Economics, Politics, Quotations — Tags: , — Nicholas Russon @ 00:01

Having taken a stab at sociology and political science, let me wrap up economics while I’m at it. Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong. About the future, not so much. However, careful economic analysis does have one important benefit, which is that it can help kill ideas that are completely logically inconsistent or wildly at variance with the data. This insight covers at least 90 percent of proposed economic policies.

Ben Bernanke “The Ten Suggestions”, speech at the Baccalaureate Ceremony at Princeton University, Princeton, New Jersey. June 2, 2013.

October 2, 2014

On national defence, don’t listen to Harper’s words – watch his actions

Filed under: Cancon, Government, Military — Tags: , , , — Nicholas Russon @ 09:28

At The 3Ds Blog, Jack Granatstein explains why the Canadian Forces are once again being starved of funding:

A few years ago I wrote that no government since that of Louis St Laurent in the 1950s had done more to improve the defence of Canada than Stephen Harper’s Conservatives. The St Laurent Liberals built up the armed forces to deal with the war in Korea and with the defence of North America and western Europe in the face of Soviet expansionism. At its peak, the defence budget took more than seven percent of Canada’s Gross Domestic Product, and the army, navy, and air force had as many as 120,000 men and women in the regular forces.

No one could expect any government in this century to spend on that scale, but the Conservative government did treat defence well in its first years in power. The commitment to the Afghan War, never very popular, was handled capably, and the troops received everything they needed — helicopters, new artillery, upgraded armoured personnel carriers, and tanks, not to mention new transport aircraft. The number of regulars rose slowly and slightly toward 65,000, and the government presented a schematic Canada First Defence Policy in 2008 that listed a range of objectives and equipment acquisitions. The budget projections were colossal, almost $500 billions to be spent over the next 20 years.

But that was then, this is now:

The result was that the defence budget was cut, in substantial part because deficit reduction and a budget surplus were more important than “toys for the boys.” From a peak of $21 billion in 2009-10, the defence budget in this fiscal year is $18.2 billion, about a 13 percent reduction in dollars made worse by inflation. The percentage of GDP spent on defence is now hovering at one percent, the lowest since the 1930s. In 2009, it was 1.3 percent. Making matters even worse, the Department of National Defence somehow cannot spend all the money it gets, returning almost $10 billion to the Treasury since 2006.

Despite Harper’s tough talk on the international stage, his government’s active neglect of the needs of the armed forces means we can’t back up his pugnacious rhetoric with any serious military effort: a frigate in the Black Sea, four CF-18s in the Baltic, a couple of transport aircraft shuttling supplies into Erbil, and a small special forces contingent helping the Kurds … and that’s about our current limit for overseas deployment. The Royal Canadian Air Force is still waiting for new helicopters (after more than 20 years of stop-go-stop procurement disasters) and a decision on replacing the CF-18. The Royal Canadian Navy just announced the immediate retirement of four ships, with no replacements available for years (if ever), and the Canadian Army is struggling to maintain equipment and keep up training schedules due to budget constraints.

And, as Granatstein points out, if the Liberals or NDP win the next federal election, the situation will get worse, not better, as neither party sees the military as any kind of priority — quite the opposite.

Update: Speaking of cheeseparing “economies”, here’s the Department of National Defence’s most recent “saving”.

National Defence slashed its annual order of ammunition this year to save money — a revelation that raised fresh questions Wednesday about just how prepared Canada is to do battle with militants in the Middle East, Murray Brewster of the Canadian Press writes.

More from his article:

The 38 per cent cut was large enough to cause other government departments, Public Works and Industry Canada in particular, to sit up and take stock of the impact, internal documents obtained by The Canadian Press show.

One such document, a memo to Public Works Minister Diane Finley dated Feb. 5, 2014, indicates her department tried to convince defence officials to either abandon the cut or at least spread it out over a couple of years.

Defence officials said that would be impossible, because “they would not allow the department to meet its financial targets.”

As a result, the 2014 ammunition budget was reduced to $94 million from $153 million.

During the early phases of the Afghan war, National Defence was caught similarly flat-footed and had to rush an order through General Dynamic Ordnance, particularly for artillery shells.

The memo surfaced on the same day Prime Minister Stephen Harper told the House of Commons that the cost of deploying special forces to northern Iraq is being taken out of the department’s current budget.

September 23, 2014

“Rock star economy” leads to first majority government in New Zealand since 1996

Filed under: Economics, Pacific, Politics — Tags: , , , , — Nicholas Russon @ 08:06

Anthony Fensom reports on Saturday’s election results in New Zealand:

New Zealand’s “rock star economy” helped center-right Prime Minister John Key achieve a thumping election victory. But with major trading partner China slowing, are financial market celebrations premature?

The New Zealand dollar, government bonds, and stocks gained after Key’s National Party romped to power in Saturday’s poll, securing its third straight term and the nation’s first majority government since proportional representation was introduced in 1996.

Despite “dirty politics” claims and a late attempted campaign ambush by internet entrepreneur Kim Dotcom, the incumbent National Party won 61 of 121 parliamentary seats and 48.1 percent of the vote, the party’s best result since 1951.

In contrast, the main opposition left-leaning Labour Party, which pledged an expansion of government, secured only 24.7 percent of the vote for its worst performance since 1922. The Greens won 10 percent and New Zealand First 8.9 percent as pre-election predictions of a closer race proved false.

Key pledged to maintain strategic alliances with the Maori, ACT and United Future parties, which won four seats between them, further strengthening his parliamentary majority.

[...]

“Like [Australian Prime Minister] Abbott, Key as a new prime minister inherited a budget and an economy in deep trouble…Six years later, the budget is in surplus, unemployment at 5.6 percent is falling and the economy is growing so strongly the New Zealand Reserve Bank became the first among developed countries to raise interest rates to deter inflation,” noted the Australian Financial Review’s Jennifer Hewett.

“Not only did the Key government cut personal and corporate tax rates, it raised the goods and services tax to 15 percent while steadily reducing government spending over years of ‘zero budgets,’” wrote Hewett, who urged Abbott to “learn some sharp lessons” from Key’s electoral successes.

Key’s party has pledged to cut government debt to 20 percent of gross domestic product (GDP), reduce taxes “when there is room to do so” and create more jobs, aiming to undertake further labor and regulatory reforms as well as boosting the supply of housing.

September 11, 2014

US Navy facing unpleasant budget choices and diminishing options

Filed under: Military, Technology, USA — Tags: , , — Nicholas Russon @ 10:30

It’s still the largest navy in the world, and will continue to be for some time yet … but it’s shrinking.

BATH, Maine (Oct. 28, 2013) The Zumwalt-class guided-missile destroyer DDG 1000 is floated out of dry dock at the General Dynamics Bath Iron Works shipyard. The ship, the first of three Zumwalt-class destroyers, will provide independent forward presence and deterrence, support special operations forces and operate as part of joint and combined expeditionary forces. The lead ship and class are named in honor of former Chief of Naval Operations Adm. Elmo R. "Bud" Zumwalt Jr., who served as chief of naval operations from 1970-1974. (U.S. Navy photo courtesy of General Dynamics/Released)

BATH, Maine (Oct. 28, 2013) The Zumwalt-class guided-missile destroyer DDG 1000 is floated out of dry dock at the General Dynamics Bath Iron Works shipyard. The ship, the first of three Zumwalt-class destroyers, will provide independent forward presence and deterrence, support special operations forces and operate as part of joint and combined expeditionary forces. The lead ship and class are named in honor of former Chief of Naval Operations Adm. Elmo R. “Bud” Zumwalt Jr., who served as chief of naval operations from 1970-1974. (U.S. Navy photo courtesy of General Dynamics/Released)

In 2009 the navy decided it could only afford to build three of the new DDG-1000s. To replace the cancelled DDG-1000s the navy resumed building older DDG-51 Arleigh Burke class destroyers. It was all about cost. The DDG-1000s would cost more than $3.5 billion each if built in large quantities. The Burkes cost $1.9 billion each. The last of 62 original Burkes was ordered in 2002 and the last of those entered service in 2011. But now, another 13 are on order and more were going to be ordered until the shrinking naval budget got too tight for that. The 9,800 ton Burkes are smaller than DDG-1000, being 154 meters (505 feet) long and 20 meters (66 feet) wide. But even the Burkes have been growing, with the first ones weighing in at only 8,300 tons. In 1945, most destroyers were about 3,000 tons. This constant size escalation is something navies, especially the Americans, have had a hard time dealing with, mainly because the cost per ton has escalated even more (even after taking inflation into account).

While the DDG-51 is much less expensive than the DDG-1000, some navy officials believe that in the long run the larger and more expensive DDG-1000 would be a better investment. The key problem here is the inability of the navy to control costs, and cost estimates, and the inability of the DDG-51s to provide space for new technologies. The navy hopes to overcome this by installing smaller versions of new tech in the DDG-51s and to upgrade other DDG-51s if the new stuff works out.

There are other problems as well, such as the costs of upgrades. Because of budget cuts the navy plans to buy some time (about a decade) by upgrading dozens of existing destroyers and cruisers. This is a bitter pill to swallow, as only a decade ago the navy was so sure about the new DDG-1000 that it accelerated the retirement of a dozen of the 31 Spruance class destroyers, in order to save the $28 million a year it would cost to keep each one of them in service. These ships were not just retired, they were all either broken up or sunk in training exercises. The dozen that entered service in 1979-83 could have been refurbished and been available until 2019. That’s a lost opportunity.

The guided missile destroyer USS Arleigh Burke (DDG 51) steams through the Mediterranean Sea. U.S. Navy photo by Journalist 2nd Class Patrick Reilly. (RELEASED)

The guided missile destroyer USS Arleigh Burke (DDG 51) steams through the Mediterranean Sea. U.S. Navy photo by Journalist 2nd Class Patrick Reilly. (RELEASED)

In the end these extensive refurbishments were too expensive and the navy was forced to fall back on a two-tier refurb plan that concentrated on electronic and software systems. The cheaper tier, called MILSPEC (designed specifically and only for military use) cost $113 million and takes six months per ship. This upgrades a lot of the 1980s electronics in the older DDG-51s. The other tier, COTS (commercial off-the shelf) uses commercial hardware and software to replace the older MILSPEC stuff. This makes these ships easier and cheaper to continue upgrading but all this costs $184 million and 18 months per ship. All these upgrades concentrate on the ability of DDG-51s to support the Aegis modification that enables missiles and low orbit satellites to be shot down. There is additional money (from outside the navy budget) available to do this.

The navy is still in danger of losing (to retirement because of aging and failing systems) the oldest DDG-51s if money is not available to refurbish elderly hulls and mechanical equipment. Because of the unpredictable future budget the navy also has to make plans for some radical downsizing. If the money is not there, neither are the ships and prudent admirals have to plan accordingly.

September 10, 2014

NATO’s “aim” problem

Filed under: Europe, Military, USA — Tags: , , — Nicholas Russon @ 10:35

James Holmes explains why “aim” isn’t good enough for NATO members:

The Naval Diplomat is not from Missouri, America’s Show-Me State. But I’m in a show-me state of mind following last week’s NATO summit in another Newport — Newport, Wales. Lofty words were said. The summit communiqué pledges, for instance, to restore some sanity to defense spending.

NATO long ago fixed the standard for defense spending at 2 percent of GDP. Few meet the standard, but at Newport the NATO-European powers put everyone on notice that they’re really, truly serious about it. The small minority that already comply — Great Britain (for the moment) and Greece, alongside the United States — will “aim to continue to do so.” The majority that don’t vow to arrest further slippage. And they will “aim to increase defense expenditure in real terms as GDP grows,” and “aim to move towards the 2% guideline within a decade,” helping field viable forces.

Aim being the keyword — or, more accurately, the key diplomatic weasel word — in these passages. How many European allies will fulfill their commitment, and how many will avail themselves of the escape clause? Barry Pavel of the Atlantic Council observes charitably that the uptick in budgets is “not going to happen across the entire alliance, but it’s useful for framing incentives for some nations to start to contribute more.” And that tepid prediction comes from someone who’s presumably a NATO enthusiast.

So let me get this straight. NATO-Europe resolutely promises to try … to build up to a level that barely qualifies as peacetime defense spending … over the next decade … if GDPs expand to permit it. Wow. As a matter of alliance management, think about the message the Newport communiqué telegraphs. To us in North America, it indicates that Europe sees itself inhabiting entirely tranquil surroundings, untroubled by anything like, say, Russian aggression against an Eastern European neighbor.

September 5, 2014

NATO – “they spent all their money on buying Ferraris and now they have no gas money”

Filed under: Europe, Military, USA — Tags: , , , — Nicholas Russon @ 08:34

Philip Ewing reports on the chances of improved military “readiness” among the NATO allies:

With President Barack Obama in Europe this week for a major NATO summit, the White House hopes the growl of the Russian bear on Europe’s eastern flank means the moment is right for some long-sought reforms to the alliance. But the outlook appears dim for anything beyond incremental steps at best.

The major reason is one that has frustrated policymakers over the past several administrations: Most European nations would love a stouter defense structure — so long as they don’t have to pay for it.

The North Atlantic Treaty Organization requires that member nations devote at least 2 percent of their economies to defense spending, yet today only four do: the U.S., Britain, Greece and Estonia. Although this week’s summit in Wales appears likely to yield a “pledge” in support of increased spending in the wake of Russia’s invasion of Ukraine, no one expects a serious effort from members other than those most directly threatened, including Latvia, Lithuania and Poland.

[...]

Obama and U.S. officials also are focused on bolstering European military “readiness,” particularly as U.S. spending declines. NATO relies on the U.S. for critical military capabilities such as surveillance, in-flight refueling and transportation. European militaries field top-rate troops, ships and aircraft but keep only weeks’ or even days’ worth of munitions on hand. In NATO’s 2011 campaign against Libya, many nations ran out of munitions and the French began dropping concrete bombs.

“It’s sort of like they spent all their money on buying Ferraris and now they have no gas money,” Benitez said. “There are many allies that literally aren’t flying their planes because they can’t afford to. They have very advanced fleets, but their fleets aren’t leaving port because they can’t afford to.”

September 2, 2014

British government “austerity”

Filed under: Britain, Economics, Media — Tags: , , , — Nicholas Russon @ 14:29

Theodore Dalrymple explains why changing the name of something does not actually change the thing being described, no matter how much politicians or journalists wish it did:

… some errors are important, and one sees them more insistently the older one grows. For example, the other day I read an article in Le Monde about the forthcoming referendum in Scotland on independence from the United Kingdom. The author of the article was clearly sympathetic to the cause of independence, but that was not the cause of my irritation with the article, nor the fact that he quoted an old man, a former trade union militant, who said that he was in favor of independence, among other reasons, because the United Kingdom was the fourth most unequal country in the world. If old men in Scotland can be as ignorant of the world as that, it is an interesting sociological observation; and the author of the article is almost certainly right that those in favor of Scottish independence favor a state even more extensive in the name of equality than the one that they already have.

No, I was irritated rather by the fact that the author of the article accepted that the policy of the present British government can properly be described as one of austerity. What the alleged austerity amounts to is this: that in the current year the government will borrow only one in six of the pounds it spends instead of one in five, as it did last year. As to the reasons for this less than startling decline in its borrowing requirements, it was not because the government was spending less but because it was receiving more taxes, from the speculative housing bubble which it has done much to fuel. If that bubble should burst, the borrowing necessary to maintain current levels of expenditure (already very high) would rise again, possibly higher than ever.

This is not a question of whether the economic policy followed by the government is the right one or not: perhaps it is and perhaps it isn’t. It is a question of the honest use of words. One would not say of a man who passed from smoking sixty cigarettes a day to fifty that he had given up smoking, or that he had exercised great self-denial. And one would not, or rather should not, say of an organization that had balanced its budget once in fifty years (the British government) that it was practicing austerity merely because it had to borrow a slightly lower percentage of what it spent than it did the year before. This is to deprive words of their meaning.

But does this matter? As the philosopher Bishop Butler once said, everything is what it is and not another thing. A budget deficit is a budget deficit, whether you call it profligacy or austerity. A thing is not changed by being called something different.

Unfortunately, matters are not quite as clear-cut as that. In human affairs, words matter, as much because of their connotations as of their denotations. Austerity means stern treatment and self-discipline. It means harshness and astringency. Needless to say, harshness in their government is not what most people look or will vote for. If reducing the rate at which you overspend and accumulate debt is called austerity, no one will dare go any further in that direction, though it were the right direction in which to go. Words, said Hobbes, are wise men’s counters but the money of fools: so that many men will take the name for the thing itself. Whether more active attempts to balance the budget would be advisable I leave to economists to decide (they can’t, of course).

July 30, 2014

QotD: Balancing the budget

Filed under: Economics, Government, Politics, Quotations — Tags: , — Nicholas Russon @ 00:01

… it sounds like a sober and centrist position. I mean who believes in deficit financing? Well everybody but you’re not suppose to admit it out loud. Like dwarf porn. Many watch but few will say so. What it means in practice is one of two things. If an actual conservative uses the term it means that the public service is getting taken to the tool shed. There being few actual conservatives in politics what it usually means is that we’ll keep spending until someone makes us stop.

That’s when the bond market vigilantes step in. Then everyone blames the bond market for ending the party. The kind politician would love, absolutely love, to spend more money on “X” but those evil Gordon Gekko types won’t let him. In truth the bond market traders are no more responsible for a government going broke than a doctor is responsible for giving an alcoholic DT.

The state, observed Bastiat so many years ago, is the great fiction by which everyone tries to live at the expense of everyone else. Politics is the lie that this can go on indefinitely. Voters complain about the low levels of honesty in politics. But a dishonest political class is the product of a dishonest electorate. If people want something for nothing, they’ll get the lying louses they deserve. Fool me once, shame on you. Fool me a hundred years in a row and the shame is very much on the ordinary bitchin’ voter.

Richard Anderson, “Transparent Lies”, The Gods of the Copybook Headings, 2014-07-28.

May 29, 2014

Harper’s “starve the beast” policy continues

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas Russon @ 07:22

In Maclean’s, Paul Wells updates us on the multi-year diet Stephen Harper has been running on the government’s “revenue generating” tools:

If I were the Conservative Party, I’d be using the latest report [PDF] from the office of Parliamentary Budget Officer Jean-Denis Fréchette to fundraise too. By the standards that motivate Conservative donors, this report is highly motivating.

The report, by PBO analyst Trevor Shaw, examines the reduction in federal revenues resulting from all the major changes to personal income tax and the GST since 2005. It’s an odd choice of starting point — 2005 was the second of Paul Martin’s two calendar years as prime minister — but only a small part of the reduction Shaw measures is attributable to that second Martin budget. Most has happened since.

And the net effect is striking:

    “In total, cumulative changes have reduced federal tax revenue by $30 billion, or 12 per cent. These changes have been progressive, overall. Low and middle income earners have benefited more, in relative terms, than higher income earners.”

Shaw attributes $17.1 billion of the reduction to changes to personal income tax level and structure, and $13.3 billion to changes in GST/HST rates. He doesn’t count revenue reductions from changes to corporate income tax. We’ll get back to that. But on the personal income-tax and GST side, the final number is probably actually a little bigger than $30 billion: Shaw writes that he couldn’t get enough data to make his own estimate of revenue reductions due to Tax Free Savings Accounts, but passes along a Finance Canada estimate that it’s good for $410 million in revenue reductions. So, figure $30 billion and change in the current tax year that Ottawa would have raised if it hadn’t been for the past decade’s worth of tax changes.

NDP leader Thomas Mulcair is apparently hoping to make up the “shortfall” (from the point of view where any reduction in government spending is bad) by jacking up corporate taxes. This may not work as well as he hopes:

First, Mulcair is fooling himself if he thinks corporate taxes can be increased to make up for the shortfall in personal-tax income Harper has engineered. As the PBO points out, “Personal income tax and the federal portion of the GST/HST account for 75 per cent of federal tax revenues.” There’s way less room to make money off rich fat cats than Mulcair pretends. I mean, he’s welcome to keep pretending, but if he keeps his word an NDP government will remain short of cash. And a Liberal government, more so.

Second, this is why Stephen Harper is in politics. I wrote a book about that. He may one day stop being prime minister, at which point the real fun begins, because his opponents are promising to run a Pierre Trudeau government or a Jack Layton government at John Diefenbaker prices. It can’t be done. Their inability to do it will be Harper’s legacy.

March 31, 2014

Comparing NATO and Russian military spending to 2012

Filed under: Cancon, Europe, Military, USA — Tags: , , , — Nicholas Russon @ 10:23

Mark Collins links to this Washington Post graphic showing a comparison of military spending in the top five NATO countries and Russia (counting Soviet spending 1988-1991). Note that the United States and Russia now each spend the same proportion of GDP on their respective military forces:

Click to see full-size graphic

Click to see full-size graphic

For reference, Canada’s military budget doesn’t crack the top 10 in NATO: we spend about US$16.5 billion per year (not even in the top 15). Mark also points out that Australia spends proportionally more than Canada … about 50% more, in fact. But it should also be noted that while Canada and Australia have a lot in common, our defence needs are significantly different: Oz is in a much more dangerous part of the world than Canada, and they don’t share a lengthy border with the world’s biggest military spender. You could probably make a viable case that Australia isn’t spending enough given the rough neighbourhood they’re in.

March 20, 2014

Jim Flaherty’s legacy

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas Russon @ 10:10

The federal finance minister announced his resignation the other day. This had been rumoured for quite some time, as Jim Flaherty had been having health issues for the last couple of years. He’s at least for the time being remaining as my local MP (full disclosure: I coached two of his sons in soccer several years ago). He wasn’t going to be my MP in the next parliament, as my village is being moved to a different riding under the new boundaries. At Gods of the Copybook Headings, Richard Anderson tries to find the right words to say goodbye:

Writing valedictory posts is always a bit tricky. You have to strike a balance between showing the bad that is the obvious at the moment with the good that might be visible only in hindsight. It be must admitted that Jim Flaherty was not a bad finance minister, a minister who surrendered to every short-term political demand of the cabinet. Nor was he a great one charting a new course for Canada. He didn’t shift the goal posts, like Michael Wilson did for Brian Mulroney or Paul Martin did for Jean Chrétien. Big Jim minded the shop better than the other guys would have. Among midgets he was a giant.

The Flaherty years consisted of digging a gigantic hole and then carefully filling it back in. Modest surpluses, massive deficits and then a projected modest surplus. To quote the old poem: “Always he led us back to where we were before.” The net result is that we have a somewhat larger national debt than if we’d balanced the books for eight straight years. Not good but not too bad either.

[...]

As for Big Jim? Well he was one of the best Liberal finances minister of the last hundred years.

Such a well-placed barb. So artistically planted. And so true.

Alberta Premier resigns (just ahead of the party lynch mob)

Filed under: Cancon, Government, Politics — Tags: , , , — Nicholas Russon @ 07:36

Colby Cosh on the resignation of Alberta’s Alison Redford:

It was a tearful surrender for Alison Redford Wednesday night as she gave a curiously backward resignation speech, grocery-listing the accomplishments of her government’s two years in power before announcing that she will step aside as Premier of Alberta on Sunday. Among these accomplishments, Redford trumpeted a “fully balanced” 2014 budget, which is “balanced” in an unusual sense of that term meaning “expenditures far exceed revenues, but in a nice way.”

That sort of cynical language was, it must be said, part of her problem with voters. The Alberta budget became more cryptic under Redford, and the usual accounting fictions have been stressed to the breaking point, with revenues assigned hugger-mugger to “operating” and “capital” purposes with no very clear line of demarcation between. If you think Albertans don’t pay attention to that sort of thing, you don’t know us too well.

There will be a temptation to sum up Redford’s ouster by citing her clownishly expensive December trip to South Africa to attend the funeral of Nelson Mandela. Redford, in truth, had almost literally every kind of problem you can imagine a Westminsterian political leader having, all of them chronically. Her relationship with her caucus was dire, as became obvious to the news-reading public in the last fortnight. Any defenders she might have had were keeping pretty quiet, and no one seemed to expend much effort reading from an orchestral score of talking points. Few MLAs ventured beyond muttering “She needs to make some changes.” From some of these, it was pretty obvious that the change they had in mind was the one that happened tonight.

[...]

Redford’s resignation completes the transition of the Alberta Progressive Conservative Party from unstoppable electoral force to the Sick Man of Canadian Politics. Sick men have risen from their deathbeds before, and the opposition Wildrose Party may not be ready to complete a journey to power that is following the Reform Party model. (You will recall that this involved negotiating quite a few twists and turns and a couple of avalanches and volcanos.)

March 8, 2014

RCN’s Joint Support Ships behind schedule and over budget

Filed under: Cancon, Military — Tags: , , — Nicholas Russon @ 11:07

Terry Milewski reports on the state of Canada’s shipbuilding program for the Royal Canadian Navy, and it’s not pretty:

An internal government memo obtained by CBC News shows that all four parts of the government’s huge shipbuilding program are either over budget, behind schedule, or both.

Written Oct. 7 last year by the deputy minister of national defence, Richard Fadden, the memo shows that three of those four programs also face “major challenges” of a technical nature, as well as difficulties lining up skilled manpower to get the ships built at all.

The memo, released to the CBC following an Access to Information request, leaves little doubt that Canada’s crippled supply ship, HMCS Protecteur, won’t be replaced before the year 2020.

The spectacle of the 46-year-old Protecteur, Canada’s only supply ship in the Pacific, being towed into Honolulu after an engine-room fire has thrown the lack of a replacement into sharp focus. Although there’s a plan to build two new supply ships, there’s no sign the work will even begin until late 2016. That means a new one won’t enter service until the end of the decade.

JSS and AOPS building status March 2014

A chart summarizing the state of the shipbuilding effort uses green and yellow squares to indicate where those problems are — the green meaning, on track, and yellow meaning, trouble — and there’s a lot of yellow.

For the Joint Support Ships — that’s the pair of supply ships — the chart shows trouble with both the schedule and the price. The memo explains that this means the program is up to 20 per cent behind schedule and up to 10 per cent over budget.

As I’ve said many times before, the Canadian government is managing to get the least possible bang for the buck on shipbuilding because they view the shipbuilding program as a regional economic development scheme (and a way of funneling money to marginal constituencies) rather than as an essential part of keeping the RCN properly equipped. It’s pretty obvious in this case:

Take the supply ships. “Yellow” suggests they’re over budget, but doesn’t indicate what the budget should be. But comparisons with Canada’s allies could raise eyebrows even further.

Britain, for example, opted to build its four new naval supply ships much more cheaply, at the Daewoo shipyard in South Korea. The contract is for roughly $1.1 billion Cdn. That’s for all four. By contrast, Canada plans to build just two ships, in Vancouver, for $1.3 billion each. So Canada’s ships will be roughly five times more costly than the British ones.

But there’s a twist. Canada’s supply ships will also carry less fuel and other supplies, because they’ll be smaller — about 20,000 tonnes. The U.K. ships are nearly twice as big — 37,000 tonnes. Canadians will lay out a lot more cash for a lot less ship.

January 26, 2014

Monty on “real” poor people

Filed under: Economics — Tags: , , — Nicholas Russon @ 12:27

At Ace of Spades HQ, Monty returns from a mundane-world-induced hiatus:

Articles like this make me wonder if the bien pensant journalist-and-pundit class knows any actual poor people. I was born poor, grew up poor, and spent a good chunk of my 20’s poor. Not genteel poor, either — I mean hard, stony-bottom, empty-pocket poor. I come from poor people.

Poor people don’t think about money in the same way that more well-off people do. When you’re poor, money — and the lack thereof — informs your every moment, waking and sleeping. You know exactly, at any given moment, how much money you have, down to the penny. How much in the bank, how much in your jeans, how much in the coffee can on the counter at home. Every purchase is a choice — if I buy this six-pack now, that means hot dogs instead of hamburger for dinner tomorrow; if I pay my cable bill, that means that instead of dinner and a movie my best girl and I get to spend a night at home watching the TV. You triage your bills — rent comes first, then heat. Then … you decide: cable or cellphone? Who can you put off the longest? How long can you float things?

You start with the credit cards because you figure you have the right to treat yourself once in a while. If you have to sit at home instead of going out, what’s wrong with having a nice flat-screen TV to watch? And then the car went south, and that blew a $500 dollar hole in your budget, so you had put your groceries and gas on the credit card that week just to make ends meet. The kids needed new clothes and shoes and supplies for school. You’ve got to pay the minimums on the card just to keep things going, and the balance just creeps higher and higher until you’re butting up against the limit. Then you get another card, and maybe the old lady gets one too. And pretty soon … well. You wake up at night in a cold sweat because you know that bankruptcy and ruin are only a breath away. It’s not just a question of if you lose your job or get sick and can’t work; it’s a question of losing the overtime hours you’ve become accustomed to, or if the wife goes back to part-time instead of full time. You realize you’re barely treading water as it is; it would only take a small wave to drown you.

Not being able to afford the small luxuries isn’t poverty. Poverty is being constantly worried that you can’t afford the necessities of life. Waking up in a cold sweat because you’re not sure you can make the rent payment … again. It’s a constant nagging worry that saps your energy and keeps your stomach churning.

January 14, 2014

2014 Economic Freedom Rankings

Filed under: Cancon, Economics, Liberty — Tags: , , — Nicholas Russon @ 10:51

The Heritage Foundation has posted their 2014 economic freedom rankings. Here’s a slideshow of the top ten countries by Heritage’s ranking formula:

The United States missed the top ten, coming in at #12. Canada ranked number six:

Canada’s economic freedom score is 80.2, making its economy the 6th freest in the 2014 Index. Its overall score is 0.8 point better than last year, reflecting improvements in investment freedom, the management of government spending, and monetary freedom. Canada continues to be the freest economy in the North America region.

Over the 20-year history of the Index, Canada has advanced its economic freedom score by 10.7 points, the third biggest improvement among developed economies. Substantial score increases in seven of the 10 economic freedoms, including investment freedom, fiscal freedom, and the management of public spending, have enabled Canada to elevate its economic freedom status from “moderately free” 20 years ago to “free” today.

A transparent and stable business climate makes Canada one of the world’s most attractive investment destinations. Openness to global trade and commerce is firmly institutionalized, and the economy has rebounded relatively quickly from the global recession. The financial system has remained stable, and prudent regulations have allowed banks to withstand the global financial turmoil with little disruption.

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