Of the numerous and occasionally contradictory techniques used to ration demand and supply [when monetary prices are not used], perhaps the most common is past behavior: persons already in apartments are given preference under rent control, or past acreage determines current allotments under agricultural price support programs. Another common technique is queuing or first come – first served: taxicabs, theater tickets, medical services, and many other goods and services are rationed in this way when their prices are controlled. Of course, discrimination and nepotism are also widely used; the best way to get a rent-controlled apartment is to have a (friendly) relative own a controlled building. Other criteria are productivity – the least productive workers are made unemployed by minimum wage laws;…. collateral – borrowers with little collateral cannot receive legal loans when effective ceilings are placed on interest rates.
Each rationing technique benefits certain groups at the expense of other groups relative to their situation in a free market. Price controls are almost always rationalized, at least in part, as a desire to help the poor, yet it is remarkable how frequently they harm the poor.
Gary Becker, Economic Theory, 1971.
August 21, 2016
August 16, 2016
Every expansion of the state incites more people to compete – and to compete more intensely – to possess the power over others that that expansion brings. From each individual’s perspective, it’s better to be in the group that exercises power rather than in the groups against whom the power is exercised. Unlike competition in markets, competition for power wastes material resources and human time and energy (rent-seeking wastes); such competition is never win-win but, rather, win-lose. But also unlike competition in markets, competition for power results in the worst form of inequality – indeed, the only form of inequality that warrants legitimate concern – namely, inequality of power. Those with state power, regardless of how they acquire it, can command those without state power. Those with state power use force to override the choices of those without state power. Those with state power do the choosing; those without state power do the obeying.
Unlike market-enabled differences in monetary incomes and wealth, this species of inequality – inequality of power – is inhumane and destructive, and it results from humans’ most primitive impulses.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-07-25.
July 14, 2016
Sarah Skwire loves the recent adaptation of Jane Austen’s novella Lady Susan, and believes that Austen was heavily influenced in this particular work by Mary Wollstonecraft’s A Vindication of the Rights of Women:
Wollstonecraft argues that the women of her time — and Austen’s time — were “weak, artificial beings, raised above the common wants and affections of their race, in a premature unnatural manner, [who] undermine the very foundation of virtue, and spread corruption through the whole mass of society.”
Their corrupting influence, though, is not due to some sort of original sin handed down from Eve after the Garden of Eden. It is the result of the conscious and intentional educating of women out of natural virtue and into habituated weakness, dependence, and immorality.
Women are, in fact, so much degraded by mistaken notions of female excellence, that I do not mean to add a paradox when I assert, that this artificial weakness produces a propensity to tyrannize, and gives birth to cunning, the natural opponent of strength, which leads them to play off those contemptible infantine airs that undermine esteem even whilst they excite desire.
This is Lady Susan in a nutshell. Her tyrannical hold over her daughter’s future, her constant deceptions in matters large and small, and her pretended helplessness and innocence, which her male acquaintances interpret as charm — these are all hallmarks of her character.
Even more a propos is Wollstonecraft’s description of women who have been educated in this fashion and who are then left, as is Lady Susan, widowed and with a family to care for.
But supposing, no very improbable conjecture, that a being only taught to please must still find her happiness in pleasing; — what an example of folly, not to say vice, will she be to her innocent daughters! The mother will be lost in the coquette, and, instead of making friends of her daughters, view them with eyes askance, for they are rivals — rivals more cruel than any other, for they invite a comparison, and drive her from the throne of beauty, who has never thought of a seat on the bench of reason.
Wollstonecraft adds that it doesn’t take a literary genius to imagine the “domestic miseries and petty vices” occasioned by such a mother.
A world without real education for women, a world without legal equality for women — this is a world that is rife with Lady Susans.
But in Austen’s imagining of Lady Susan, we have precisely that — a literary genius turning her considerable talents (though in early days) to delineating a portrait of a woman who has become precisely what she has been educated to be. In that way, Lady Susan becomes a powerful adjunct to Wollstonecraft’s Vindication. A world without real education for women, a world without legal equality for women — this is a world that is rife with Lady Susans, grappling for power and money in the marriage market and in the gray market of sexual favors, because that is the only sphere open to women with ambition.
June 2, 2016
An amazing story in the Washington Post details how a Malaysian defence contractor got his claws into the senior officers of the US Navy’s Seventh Fleet:
A 51-year-old Malaysian citizen, Francis has since pleaded guilty to fraud and bribery charges. His firm, Glenn Defense Marine Asia, is financially ruined.
But his arrest exposed something else that is still emerging three years later: a staggering degree of corruption within the Navy itself.
Much more than a contracting scandal, the investigation has revealed how Francis seduced the Navy’s storied 7th Fleet, long a proving ground for admirals given its strategic role in patrolling the Pacific and Indian oceans.
In perhaps the worst national-security breach of its kind to hit the Navy since the end of the Cold War, Francis doled out sex and money to a shocking number of people in uniform who fed him classified material about U.S. warship and submarine movements. Some also leaked him confidential contracting information and even files about active law enforcement investigations into his company.
He exploited the intelligence for illicit profit, brazenly ordering his moles to redirect aircraft carriers to ports he controlled in Southeast Asia so he could more easily bilk the Navy for fuel, tugboats, barges, food, water and sewage removal.
Over at least a decade, according to documents filed by prosecutors, Glenn Defense ripped off the Navy with little fear of getting caught because Francis had so thoroughly infiltrated the ranks.
In his dealings with the Americans, Francis went to great lengths to ingratiate himself with senior officers, recognizing that they often cared more about high-quality service than how the bill would be paid.
Whenever a Navy vessel arrived in port, the odds were high that Francis would be waiting at the pier. Like a five-star concierge, he would arrange for shopping trips, sightseeing tours and concert tickets. A limousine and driver would be reserved for the ship’s commander.
Select sailors would be invited to an extravagant banquet, featuring cognac and whiskey, Cohiba cigars from Cuba, and platters of Spanish suckling pig and Kobe beef. Francis would sometimes fly in a band of pole dancers, which he called his Elite Thai SEAL Team, for X-rated shows, court records show.
In another display of panache, he purchased an aging, decommissioned British warship, the RFA Sir Lancelot. He refurbished and renamed it the Glenn Braveheart.
The vessel became the flagship of his fleet, and it would often deploy alongside the USS Blue Ridge, the 7th Fleet’s flagship. When in port, Francis would sometimes turn the Braveheart into a giant party boat, with prostitutes in the wardroom to entertain U.S. officers, according to court records and interviews.
June 1, 2016
Last week, Megan McArdle responded to a “my hair is on fire” diatribe from The New Yorker about a Donald Trump presidency being the end of America as we know it. She’s not convinced:
There are two stages to becoming a scary autocrat. First, you have to get into a position to seize power. The most traditional routes are the military (a task for which Donald Trump’s bone spurs left him tragically disqualified), or winning elected office to abolish or corrupt the electoral process. The former route has its risks, but once you’ve safely arrived in the presidential palace, it’s pretty easy to dispense with democracy, since you have all the guns. The latter route means you need the rest of government, including all the folks with guns, to go along with you.
This certainly does happen, even in countries that have been practicing democracies for a while. But it’s by no means a given. Franklin D. Roosevelt took a certain amount of constitutional liberty with his wackier notions, and when the courts pushed back, he hit on the scary idea of basically throwing out some Supreme Court justices and replacing them with others who would rubber-stamp his policies. (The phrasing was nicer than that, but this was the basic idea, and just the sort of first step that dictators like to take toward cementing themselves as Autocrat for Life). FDR’s own party rebelled, but the Supreme Court began cooperating, too.
There were also civil liberties violations under FDR, notably the internment of the West Coast Japanese population. But while these were appalling abuses, and a stain on the national honor, they are within the (unfortunately) normal range of government behavior in your ordinary, middling-decent democracy of the era.
So the question is not just whether Trump wants to be a dictator, but what the other branches of government will do if he tries to actually become one. I don’t just mean Congress and the courts; I mean “will the bureaucrats of the civil service follow his orders, and will the people with guns agree to go out and arrest his enemies?”
There’s clearly a portion of the electorate that thrills to the more authoritarian and violent parts of his message, and presumably some of those folks are in the military and the civil service. But I’m still fairly confident that the FBI is not, say, going to start tapping journalists’ phones to find out if they’re making fun of President Trump’s comb-over, or disappearing the ones who do.
I worry more about Silvio Berlusconi-style corruption and abuse of regulatory agencies, an impulsive foreign policy that could lead us into open conflict with a nuclear-armed power, and executive-power overreach. I also worry about simple incompetence, given how uninterested Trump seems to be in policy. All-out dictatorship is pretty low on the list, because American institutions do not seem weak enough to allow it.
March 25, 2016
[David Cay] Johnston’s piece is titled America should be more like Disneyland but instead of thinking seriously about what this means he fumbles on the 20 yard line and concludes that what makes Disneyland different is… happy thoughts. If only we were more like W.D., he says, “we could make America into a happy place.”
No, what makes Disney invest in infrastructure is not happy thoughts. Johnston is in fact clear about this:
The Walt Disney Co. invests in infrastructure because it makes the company money.
The problem with America is that our public infrastructure has been turned over to a fickle political process that is not governed by a rational calculation of cost and benefit, market test and experimentation but by a pursuit of power, glory and advantage that only rarely coincides with the public interest.
America should be more like Disneyland and to do that we need to develop institutions that allow more infrastructure to built by the private sector. Most ambitiously we need more cities as hotels, more proprietary cities. As Rajagopolan and I wrote in our study of India (in Cities and Private Planning):
The lesson of Gurgaon, Walt Disney World, and Jamshedpur is that a system of proprietary, competitive cities can combine the initiative and drive of private development with the planning and foresight characteristic of the best urban planning. A proprietary city will build infrastructure to attract residents and revenues. A handful of proprietary cities built within a single region will create a competitive system of proprietary cities that build, compete, innovate, and experiment.
Alex Tabarrok “How to make America more like Disneyland”, Marginal Revolution, 2014-12-17.
February 6, 2016
In his weekly column for USA Today, Glenn Reynolds distills down the essence of public choice theory:
The explanation for why politicians don’t do all sorts of reasonable-sounding things usually boils down to “insufficient opportunities for graft.” And, conversely, the reason why politicians choose to do many of the things that they do is … you guessed it, sufficient opportunities for graft.
That graft may come in the form of bags of cash, or shady real-estate deals, or “consulting” gigs for a brother-in-law or child, but it may also come in broader terms of political support and even in opportunities for politicians to feel superior or to humiliate their enemies. What all these things have in common, though, is that they’re not about making life better for voters. They’re about making life better for politicians.
This doesn’t sound much like the traditional view of politics, as embodied in, say, the Schoolhouse Rock “I’m Just A Bill” video. But it’s a view of politics that explains an awful lot.
And there’s a whole field of economics based on this view, called “Public Choice Economics.” Nobel prize winning economist James Buchanan referred to public choice economics as “politics without romance.” Instead of being selfless civil servants motivated solely by the public good, public choice economics assumes that politicians are, like other human beings, heavily influenced by self-interest.
Public choice economists say that groups don’t make decisions, individuals do. And individuals mostly do what they think will be best for them, not for the “public.” Public choices, thus, are like private choices. You pick a car because it’s the best car for you that you can afford. Politicians pick policies because they’re the best policies — for them — that they can achieve.
How do they get away with this? First, most voters are “rationally ignorant.” That is, they realize that their vote isn’t likely to make much of a difference, so it’s not rational to learn all the ins and outs of policy or of what political leaders are doing. Second, the entire system is designed — by politicians, naturally — to make it harder for voters to keep track of what politicians are doing. The people who have a bigger stake in things — the real estate developers or construction unions — have an incentive to keep track of things, and to influence them, that ordinary voters don’t.
Can we eliminate this problem? Nope. But we can make it worse, or better. The more the government does and the more decisions that are relegated to bureaucrats, “guidance” and other forms of decisionmaking that are far from the public eye, the more freedom politicians have to pursue their own interest at the expense of the public — all while, of course, claiming to do just the opposite. Meanwhile, if we do the opposite — give the government less power and demand more accountability — politicians can get away with less. But they’ll always get away with as much as they can.
November 27, 2015
Several months ago, the Washington Post reported on a new study of wealth and inequality that tracked how many billionaires got rich through competition in the market and how many got rich through political “connections”:
The researchers found that wealth inequality was growing over time: Wealth inequality increased in 17 of the 23 countries they measured between 1987 and 2002, and fell in only six, Bagchi says. They also found that their measure of wealth inequality corresponded with a negative effect on economic growth. In other words, the higher the proportion of billionaire wealth in a country, the slower that country’s growth. In contrast, they found that income inequality and poverty had little effect on growth.
The most fascinating finding came from the next step in their research, when they looked at the connection between wealth, growth and political connections.
The researchers argue that past studies have looked at the level of inequality in a country, but not why inequality occurs — whether it’s a product of structural inequality, like political power or racism, or simply a product of some people or companies faring better than others in the market. For example, Indonesia and the United Kingdom actually score similarly on a common measure of inequality called the Gini coefficient, say the authors. Yet clearly the political and business environments in those countries are very different.
So Bagchi and Svejnar carefully went through the lists of all the Forbes billionaires, and divided them into those who had acquired their wealth due to political connections, and those who had not. This is kind of a slippery slope — almost all billionaires have probably benefited from government connections at one time or another. But the researchers used a very conservative standard for classifying people as politically connected, only assigning billionaires to this group when it was clear that their wealth was a product of government connections. Just benefiting from a government that was pro-business, like those in Singapore and Hong Kong, wasn’t enough. Rather, the researchers were looking for a situation like Indonesia under Suharto, where political connections were usually needed to secure import licenses, or Russia in the mid-1990s, when some state employees made fortunes overnight as the state privatized assets.
The researchers found that some countries had a much higher proportion of billionaire wealth that was due to political connections than others did. As the graph below, which ranks only countries that appeared in all four of the Forbes billionaire lists they analyzed, shows, Colombia, India, Australia and Indonesia ranked high on the list, while the U.S. and U.K. ranked very low.
Looking at all the data, the researchers found that Russia, Argentina, Colombia, Malaysia, India, Australia, Indonesia, Thailand, South Korea and Italy had relatively more politically connected wealth. Hong Kong, the Netherlands, Singapore, Sweden, Switzerland and the U.K. all had zero politically connected billionaires. The U.S. also had very low levels of politically connected wealth inequality, falling just outside the top 10 at number 11.
When the researchers compared these figures to economic growth, the findings were clear: These politically connected billionaires weighed on economic growth. In fact, wealth inequality that came from political connections was responsible for nearly all the negative effect on economic growth that the researchers had observed from wealth inequality overall. Wealth inequality that wasn’t due to political connections, income inequality and poverty all had little effect on growth.
November 19, 2015
“Samizdata Illuminatus” on the historical evolution of a bunch of armed thugs into a modern government:
… I was familiar with the hypothesis that the origin of the modern state has its roots in criminal enterprise, yet it is always amusing attempting to reconcile this with the modern state’s increasingly matronly efforts to get its subjects to behave themselves. And it is certainly far from an implausible theory, when you consider how similar the objectives of a criminal enterprise and a state can be. The major difference is, of course, that the state functions within the law — hardly surprising since it is the major source of law — while criminal organisations operate outside of the law. But honestly, how could the activity of a crime gang that defeated a local rival in a turf war be described as anything other than a spot of localised gun control — in terms of ends, if perhaps not means?
But the article got me thinking about what we can do and perhaps intend to do about what Sean Gabb would describe as “the ruling class” — the politicians and senior bureaucrats — but also the minor apparatchiks, too. In terms of the big picture stuff, the bolded part above resonates with me as particularly axiomatic, and if libertarians or classical liberals or small government conservatives or one of the very many labels we choose to call ourselves — if we stand for any one single thing, surely it is for the obliteration of this instinct, this scourge, from the human species. Yes, I am fully aware that previous efforts to change human nature for various ends have generally worked out appallingly, so maybe I should write about ‘disincentivising’ an instinct rather than ‘obliterating’ it. (I’m keeping ‘scourge’. Fair’s fair.) Although there are those amongst us who favour a muscular Ceaușescu solution to big government for those who believe they can spend our hard-earned better than we can, along with those willing to assist them in taking it off us and spending it. Others prefer an incremental strategy of rolling back government to the point that those who wish to “command economic resources” for a living find they enjoy slightly less demand for their services than a VCR repairman. I suspect both methods, perhaps working in concert at times, will be necessary at differing stages of the struggle against the statists if we are ever to be able to declare victory over them (and then leave them alone, as Glenn Reynolds is wont to say).
I do have a gripe about a distinction the author makes between paper-stamping, useless, make-work bureaucracy, and “public goods” bureaucracy, an example of which he doesn’t actually specify, although throughout the piece the inference is quite clear that he’s referring to schools and hospitals and the like — and presumably in the parts of schools and hospitals where service provision takes place; not where the (many) papers are pushed and stamped. Now, many here (rightly, I believe) probably object to the contention made that the market traditionally failed to provide such services of the “public good”, hence the state springing to the rescue to address this “market failure”. There are many people here — Paul Marks comes to mind — who will know a great deal more than I do about the patchwork of friendly societies and other private arrangements that individuals and their families paid into voluntarily and turned to for financial aid in times of illness, unemployment, or other trouble, as well as the nature of the education sector prior to the era of compulsory government schooling; the vast majority of which was crowded out by “free” state healthcare and education. However, my purpose is not wish to dwell on this now, interesting a topic as it is.
November 5, 2015
Published on 26 Sep 2015
Admiral Yi Sun-sin of Korea began his legendary career with a series of disasters. Fate (and corrupt officials) conspired against him to have him repeatedly knocked down from the success he had earned, often because his insistence on strict military codes and refusal to ignore corruption made enemies of his fellow officers. Even when his superior had him tortured and blamed after a loss to the Jurchen raiders from the north, Yi persevered. Stripped of his rank and now reduced to a common enlisted man, Yi nevertheless served Korea with distinction. Meanwhile his childhood friend, Ryu Seong-ryong, had risen to become the prime minister of Korea. Ryu recognized the threat of war from Japan looming on the horizon, so when Yi asked to retire in 1588, Ryu convinced him to stay.
October 22, 2015
Last week, Daniel Pipes looked at the increasingly dictatorial ambitions of Turkish president Recep Tayyip Erdoğan:
The Republic of Turkey is undergoing possibly its greatest crisis since the founding of the state nearly a century ago. Present trends suggest worse to come as a long-time Western ally evolves into a hostile dictatorship.
The crisis results primarily from the ambitions of one very capable and sinister individual, Turkey’s 61-year old president, Recep Tayyip Erdoğan. A career politician who previously served four years as the mayor of Turkey’s megacity, Istanbul, and then eleven years as the country’s prime minister, he forwards two goals hitherto unknown in the republic: dictatorship and full application of the Shari’a, Islam’s law code.
During his first eight years of power, 2003-11, Erdoğan ruled with such finesse that one could only suspect these two aspirations; proof remained elusive. This author, for example, wrote an article in 2005 that weighed the contradictory evidence for and against Erdoğan being an Islamist. A combination of playing by the rules, caution in the Islamic arena, and economic success won Erdoğan’s party, Justice and Development (Adalet ve Kalkınma Partisi, or AKP), increasing percentages of the vote in parliamentary elections, going from 34 percent in 2002, to 46 percent in 2007, to 50 percent in 2011.
That 2011 election victory, his third in succession, gave Erdoğan the confidence finally to remove the armed forces from politics, where they had long served as Turkey’s ultimate power broker. Ironically, this change ended the increasing democratization of prior decades for his fully taking charge allowed Erdoğan to develop an oversized ego, to bare his fangs, flex his despotic muscles, and openly seek his twin objectives of tyranny and Shari’a.
Indeed, Erdoğan made his power felt in every domain after 2011. Banks provided loans to the businessmen who kicked back funds to the AKP. Hostile media found themselves subject to vast fines or physical assault. Ordinary citizens who criticized the leader found themselves facing lawsuits, fines, and jail. Politicians in competing parties faced dirty tricks. Like a latter-day sultan, Erdoğan openly flouted the law and intervened at will when and where he wished, inserting himself into legal proceedings, meddling in local decisions, and interfering with police investigations. For example, he responded to compelling raw evidence of his own and his family’s corruption by simply closing down the inquiry.
October 2, 2015
In The Freeman, Lawrence W. Reed talks about one of the last few Republicans in the Rome of Julius Caesar’s ascendance:
In the estimations of many historians, two men hold the honor as the most notable defenders of the Roman Republic. Marcus Tullius Cicero was one. Marcus Porcius Cato, or “Cato the Younger,” was the other.
Since there was a “younger,” there must have been an “elder,” too. Cato the Elder was the great grandfather of the younger. Both men, separated by more than a century, were influential in public office. Think of the elder as the social conservative, concerned in his day with preserving the customs and traditions of Rome. The younger was one of history’s early libertarians, interested more in personal and political liberties because he believed that if they were lost, nothing else mattered. It is this second one to whom I refer in the balance of this essay as simply “Cato.”
By the time of Cato’s birth in 95 BC, the Roman Republic was long in the tooth. Founded four centuries earlier, it had risen from obscurity to political and economic dominance in the Mediterranean. Rome was easily the world’s wealthiest and most powerful society. It wasn’t a libertarian paradise — slavery was a part of its makeup, as it was even more brutal everywhere else — but Rome had taken liberty to a zenith the world had never seen before and wouldn’t see again for a long time after it finally fell. The constitution of the republic embodied term limits; separation of powers; checks and balances; due process; habeas corpus; the rule of law; individual rights; and elected, representative legislative bodies, including the famous Senate. All of this was hanging by a thread in the first century BC.
Cato was just five years of age when Rome went to war with its former allies in the Italian peninsula — the so-called “Social War.” Though the conflict lasted just two years, its deleterious effects were huge. The decades to follow would be marked by the rise of factions and conflict and local armies loyal to their commanders instead of the larger society. A “welfare-warfare” state was putting down deep roots as Cato grew up. The limited government, personal responsibility and extensive civil society so critical to the republic’s previous success were in an agonizing, century-long process of collapse. Even many of those who recognized the decay around them nonetheless drank the Kool-Aid, succumbing to the temptations of power or subsidies or both.
Before the age of 30, Cato had become a supremely disciplined individual, a devotee of Stoicism in every respect. He commanded a legion in Macedon and won immense loyalty and respect from the soldiers for the example he set, living and laboring no differently from day to day than he required of his men. He first won election to public office (to the post of quaestor, supervising financial and budgetary matters for the state) in 65 BC and quickly earned a reputation as scrupulously meticulous and uncompromisingly honest. He went out of his way to hold previous quaestors accountable for their dishonesty and misappropriation of funds, which he himself uncovered.
Later he served in the Roman Senate, where he never missed a session and criticized other senators who did. Through his superb oratory in public and deft maneuverings in private, he worked tirelessly to restore fealty to the ideals of the fading Republic.
August 13, 2015
At Salon, David Dayen tells the astounding tale of American banks going feral and mass-forging legal documents to foreclose mortgages on houses they had zero claim on:
If you know about foreclosure fraud, the mass fabrication of mortgage documents in state courts by banks attempting to foreclose on homeowners, you may have one nagging question: Why did banks have to resort to this illegal scheme? Was it just cheaper to mock up the documents than to provide the real ones? Did banks figure they simply had enough power over regulators, politicians and the courts to get away with it? (They were probably right about that one.)
A newly unsealed lawsuit, which banks settled in 2012 for $95 million, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.
This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us.
August 12, 2015
“… premiers look to Ottawa for one reason and one reason only: To beat the Prime Minister … over the head with their begging bowls”
Richard Anderson explains why Ontario Premier Kathleen Wynne is upset with Prime Minister Stephen Harper:
It is a time honoured tradition that premiers look to Ottawa for one reason and one reason only: To beat the Prime Minister of the day over the head with their begging bowls. What Kathleen Wynne is looking for is not a “partnership” but a ceaseless no-strings-attached flow of federal money. Like a petulant teenager the sextuagenarian premier always wants more and offers little in return. Prime Minister Harper has wisely refused to play her game.
Now imagine that you’re Kathleen Wynne — please try to subdue the gag reflex — and billions of dollars now flow into the provincial coffers from this de facto payroll tax. Perhaps the money gets tossed into general revenues. Queen’s Park then turns arounds and issues IOUs to the “arm’s length board” in the form of increasingly worthless provincial bonds. The pension would for actuarial purposes be “fully funded” but as a practical matter one pocket of government is borrowing from the other.
But perhaps the Wynnesters are a tad more clever than all that. The revenues from this payroll tax go directly to the allegedly “arms length” investment board. Nothing goes into general revenues and the Liberals allow themselves a patina of fair dealing. The board, however, will almost certainly have its investment guidelines laid out by the government. Those guidelines, by the strangest coincidence, will likely have an “invest in Ontario” component.
Some of the money will get used to buy up provincial bonds, lowering the government’s cost of borrowing at a time when capital markets are getting skittish about Ontario debentures. Quite a lot of the rest will be used to fund infrastructure projects, private-public sector partnerships and other initiatives that will, mysteriously, favour Liberal allies. The Chretien era Adscam scandal will seem like chump change in comparison.
August 4, 2015
Published on 27 Jun 2015
Justinian wanted to restore the glory of Rome, but many obstacles stood in his way. He brought on talented advisors to help him reform the tax system, the law code, and the military might of the empire. With them he made great strides, but these advisors had very human flaws. His tax collector, John the Cappadocian, centralized tax collection and crushed corruption in his agents, greatly increasing the revenue to the empire – but he also skimmed money off the top to feed his private corruption. Meanwhile, a lawyer named Tribonian took centuries of confusing and even conflicting legal precedents and resolved them into a single code, the Corpus Juris Civilis, which remains the foundation of modern law today. He even made a textbook for students to learn from. But he was also a practicing pagan during an era when Justinian was trying to crack down on pagan rituals. And last, Justinian’s chief military commander Belisarius helped the Empire recover its military glory. He defeated the Sassanid Persians in the Battle of Dara, crushing a force of 50,000 men with only 25,000 of his own through clever strategy: he dug a trench to halt their infantry’s advance, then baited the Persian cavalry into overextending and sprang a surprise attack on them with Hun mercenaries. Although Belisarius seems to have been an upstanding person, his personal historian Procopius tainted even his clean record. Procopius wrote glowing official histories of the reign of Justinian, but his long lost secret history depicted Justinian as a literal headless demon and Theodora as a debauched monster.