Quotulatiousness

June 22, 2017

The Netflix tax is dead (again) – “This thing was a turkey, and Trudeau was right to wring its neck.”

Filed under: Business, Cancon, Government, Media — Tags: , , , , , — Nicholas @ 05:00

Chris Selley rejoices in the demise of the so-called “Netflix tax” proposal, but also pours scorn on yet another proposal to prop up Canadian print media organizations:

Justin Trudeau wasted little time last week rubbishing the Heritage Committee’s so-called “Netflix tax,” and no wonder. If you’re determined to raid people’s wallets to fund journalism they’d rather not pay for and Can-con programming they’d rather not watch, you’re far better off doing it shadily than with a shiny new tax on something people love. The sound bytes winging around in the idea’s favour were, in a word, pathetic: “it’s not a new tax, but an expanded levy!”; “we already tax cable, why not Internet?”; “we already subsidize magazines, why not newspapers?”

Good God, why any of it? This thing was a turkey, and Trudeau was right to wring its neck.

Newspaper publishers and union bosses remain undaunted in pursuit of unearned public funds, however. “Canada’s newspaper industry unites to advocate for Canadian Journalism Fund,” proclaimed a headline at News Media Canada, the publishers’ lobby group. They’re savvy enough to propose tying subsidies to employed journalists’ salaries — 35 per cent to a maximum of $30,000 per head — rather than just cutting cheques. That might fend off Executive Bonus Rage, but it won’t fend off sticker shock: the suggested eventual cost is a whopping $350 million a year.

As a taxpayer I would much rather subsidize Canada’s journalists than Canada’s legacy media companies — but I would sure as hell rather subsidize neither. The more beholden to government a country’s journalists, the less free its press. Magazine writers in this country know their publications get a top-up from Ottawa in the form of the Canadian Periodical Fund. That’s not ideal. But under News Media Canada’s proposal, we would know our jobs literally depended on government largesse. I’ll take a hard pass on that.

Publishers’ and union bosses’ claims of unanimous support notwithstanding, many unionized journalists, and many of your non-unionized friends here at the National Post, hate the idea. It risks narrowing Canada’s already remarkably narrow spectrum of acceptable ideas and arguments. It risks — no, guarantees — alienating the very consumers we need to attract. In the case of some legacy media outlets it would simply extend the runway for business models that everyone knows will never fly again. In any event, the sums being bandied about wouldn’t solve the crisis as a whole unless the solution was permanent and ever-greater government dependency. I’m amazed to see how many journalists, including some very nearly pensionable ones, support the idea.

June 17, 2017

“Probably the best example of our carny-barker economy is Tesla”

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

The Z-Man on the post-modern business models used by Amazon, Facebook, and Tesla:

The key for Amazon making it all these years was to keep people focused on everything but their financials. This is not an exception. Faceberg will never have earnings to justify its share price. In fact, it will never have user rates to justify its ad revenue. It’s not unreasonable to think that everything about the business is fraudulent. That should trigger large scale audits and investigations into its business practices, but Facebook is on the side of angels in the cultural revolution, so its all good.

Probably the best example of our carny-barker economy is Tesla. To his credit, Musk has built a real factory that builds real cars. No one is going to say the Tesla is a work of art or even a practical car, but it is a car and the technology is impressive. The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.

This only works if people think the venture will either one day turn a profit or the technology that it creates will result in something good down the road. To that end, Musk is regularly out doing his Lyle Lanley act, making all the beautiful people feel righteous by backing his ventures. He’s also telling Wall Street that he will soon be making and selling enough cars to turn a healthy profit, even without massive tax subsidies. The trouble is, that’s probably never happening, at least not with current management.

June 16, 2017

Canada’s oldest wind farm shutting down but “if there is an incentive, we’d jump all over that”

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

The owner of the oldest operating wind farm in Alberta is desperately hoping for a big government subsidy to replace the old wind turbines at their Cowley Ridge facility:

The oldest commercial wind power facility in Canada has been shut down and faces demolition after 23 years of transforming brisk southern Alberta breezes into electricity — and its owner says building a replacement depends on the next moves of the provincial NDP government.

TransAlta Corp. said Tuesday the blades on 57 turbines at its Cowley Ridge facility near Pincher Creek have already been halted and the towers are to be toppled and recycled for scrap metal this spring. The company inherited the now-obsolete facility, built between 1993 and 1994, as part of its $1.6-billion hostile takeover of Calgary-based Canadian Hydro Developers Inc. in 2009.

“TransAlta is very interested in repowering this site. Unfortunately, right now, it’s not economically feasible,” Wayne Oliver, operations supervisor for TransAlta’s wind operations in Pincher Creek and Fort Macleod, said in an interview.

“We’re anxiously waiting to see what incentives might come from our new government. . . . Alberta is an open market and the wholesale price when it’s windy is quite low, so there’s just not the return on investment in today’s situation. So, if there is an incentive, we’d jump all over that.”

In February, TransAlta president and chief executive Dawn Farrell said the company’s plans to invest in hydroelectric, wind, solar and natural gas cogeneration facilities in Alberta were on hold until the details of the province’s climate-change plans are known.

June 8, 2017

Words & Numbers: Earning Profits is Your Social Responsibility

Filed under: Business, Economics, Government — Tags: , , , , , — Nicholas @ 04:00

Published on 7 Jun 2017

“We tend to demonize people who make money – how dare they have more than us? But that negative reaction forgets the voluntary role we play in profit-making every day. This week in Words and Numbers, Antony Davies and James R. Harrigan discuss just how good it is to earn a profit, and the vital difference between that and forcing money from people.”

May 29, 2017

Who the heck is Andrew Scheer?

I admit, I wasn’t really paying attention to the federal Conservative leadership race … I’d blithely assumed that Mad Max would win … so I didn’t pay much attention to the other candidates (other than my local MP, who was eliminated on the 12th ballot). So who is this new guy? Tom Flanagan thinks he’s the Tory version of our current “sunny ways” Prime Minister, god help us:

Andrew Scheer is the new Conservative leader, beating Maxime Bernier by the narrowest of margins, 51 per cent to 49 per cent. Mr. Bernier campaigned on an adventurous platform of economic libertarianism, including an end to supply management and corporate subsidies, and new approaches to equalization and to health-care funding. Mr. Scheer, in contrast, stressed continuity with past party policy. He positioned himself as the consensus candidate, the leading second or third choice.

Mr. Scheer is 38 years old, young for a political leader but not impossibly so. (Joe Clark became leader of the Progressive Conservatives at 37 and went on to beat Pierre Trudeau in the next election.) Though young, Mr. Scheer already has a lot of political experience. He has represented Regina-Qu’Appelle for 13 years and won five consecutive elections in his riding. He has also been Speaker of the House of Commons and House Leader of the Conservative Party under Rona Ambrose.

Mr. Scheer’s political roots are in Reform and the Canadian Alliance, but he followed Stephen Harper in abandoning the sorts of libertarian policies still favoured by Maxime Bernier. As leader, Mr. Scheer will continue to pursue Mr. Harper’s goals of lower taxes, balanced budgets, and closer cooperation with Canada’s international allies – things that all Conservatives agree on. Like Brad Wall, premier of his home province of Saskatchewan, he is vociferously opposed to the Liberals’ carbon tax and has promised to repeal it, though that may prove difficult to accomplish if and when he finally comes to office.

Oh, goody! He still supports market-distorting supply management and crony capitalist subsidies for “friends of the PM”. I’m sure he’ll fit in just fine in Ottawa — they’ll make room for him at the trough. Yay!

May 20, 2017

On board The Canadian

Filed under: Cancon, Railways — Tags: , , , — Nicholas @ 04:00

The Toronto Star‘s Jennifer Bain takes a trip on VIA Rail’s premier passenger train from Toronto to Vancouver:

VIA dome observation car, 2007. Photo by Savannah Grandfather (Wikimedia)

ABOARD THE CANADIAN-That first overnight on the train was a gloriously sleepless blur disrupted by clickety clacks, rumbles, grinding squeals and ding, ding dings. Alone in F-130 in the Château Cadillac car on a Murphy bed pulled down from the wall to fill the room, I stared mesmerized through an extra-large window into the dark depths of northern Ontario and thought deeply Canadian thoughts.

Happy 150th birthday, Canada. This year cries out for a celebratory road trip. I use the term road loosely. A train track will do just fine. Let someone else drive. For four nights on the Canadian, Via Rail Canada’s iconic train from Toronto to Vancouver, I relaxed and watched boreal forest become prairie and then mountains.

Somewhere north of Sudbury that first morning, I threw on clothes and tiptoed down the narrow hall, hands outstretched to brace for sways and lurches, through the Château Dollard sleeping car to the end of the train.

The Laurentide Park car is tricked out with a downstairs lounge and upstairs domed seating area. The DIY tea and coffee station became my watering hole.

Routes of The Canadian: the original 1955 route is in red (on CPR trackage) and the current route is in blue (mainly on CN tracks). VIA took over operation of The Canadian in 1978 and changed to the current route in 1990.

You are in your own world on the Canadian, but not necessarily alone. Work on the lost art of small talk in the dining car when you’re seated with strangers. Play a board game with fellow passengers since there’s no Wi-Fi and often no cell service.

This 4,466-kilometre journey is a throwback to simpler times.

Jason Shron — a train nut from Thornhill that I met through Box — has done the Canadian upwards of 40 times and found “there’s a tendency for people on the train to spill their guts to strangers,” especially if they’re on divorce tours, which can become awkward the next day. “There’s a certain magic to that,” he admitted. He was taking his three kids to Winnipeg to meet his wife and other family for Passover.

Shron owns Canada’s largest model train company, built a section of a full-size Via car in his basement, is restoring two train cars and is writing a book about Via for its 40th anniversary next year. The Crown corporation “doesn’t celebrate its own history and doesn’t celebrate its own people” nearly enough, he lamented, and so he’s “like this one-man Via fan club.”

Make that two. Shron and Box love trains for different reasons — the actual machines and the art of train travel — but they are anomalies. Too many Canadians have never been on a train, much less slept on one.

Trains are not a part of our modern lives or lexicon, so my learning curve is steep. Passenger trains don’t have cabooses, conductors are obsolete and drivers are called engineers. Freight trains have priority in Canada when there’s one line, so passenger trains like the Canadian have to wait on the siding, causing delays.

There are economy-class seats that you sleep upright in, and banks of seats that convert into upper and lower “berths” at night with just a curtain for privacy. There are private rooms, some with a toilet that gets covered when the bed comes out, and a shared shower down the hall. I was lucky enough to experience “Prestige class” in a room with an L-shaped couch, Murphy bed and private en-suite washroom, with access to a trio of concierges, reserved seating at the front of the dome car, meals, booze and all the Earl Grey I could drink.

Part of the reason “many Canadians have never been on a train” is that there are a lot fewer trains running today than in years past: when VIA took over most intercity passenger service, it rationalized a lot of the routes (but not enough to become profitable, hence the federal government’s ongoing subsidies to VIA). Even with those subsidies, passenger trains aren’t a bargain for the average traveller, and usually compare poorly to bus or air travel in both cost and frequency. Most of VIA’s trains lose money, as this table from 2014 shows:

So, how expensive is the trip that Ms. Bain took? I went to the VIA website to find out. Booking a trip from Toronto (in my case, Oshawa) to Vancouver on The Canadian to leave today (Saturday) would cost an eye-watering $9,684.10 per person in Prestige class (including a $500 service fee, but not including HST [Harmonized Sales Tax] of $1,114.10). There are cheaper fares — booking in advance, not taking the Prestige class ticket, other available sales, etc. — but a quick Google search shows return flights in the $600 range (but I could save $226 off that if I booked for tomorrow instead of today).

For a potted history of The Canadian there’s a useful Wikipedia page.

May 18, 2017

If you subsidize art, you’ll get more [bad] art

Filed under: Europe, Media — Tags: , , , , — Nicholas @ 03:00

I missed this when it got posted initially … Theodore Dalrymple on an Irish government initiative to actually audit the art they’re busy subsidizing:

Like most governments these days, the Irish government is a patron of the arts. The problem is that most governments know as much about the arts as I know about how to select camels for a camel race.

Naturally, therefore, governments rely on advisers to advise them on artistic matters, in effect delegating to them the disbursement of funds. Here the problem is that the art world is now so corrupt morally, intellectually, and aesthetically that the advice it gives is more likely to resemble Mr. Madoff’s advice to investors than Lord Duveen’s to Henry Clay Frick. There has always been bad art, of course, but rarely has it been so heavily subsidized; and when we see work of which we are inclined to ask, “But is it art?” we should perhaps be asking instead, “Is it government-funded?”

The Irish Arts Council, however, recently came up with a novel, even transgressive idea (“transgressive” is the highest term of praise in current art criticism, incidentally), namely that the artists they subsidize should show some sign of artistic endeavor. It is true that the council’s choice of word, audit, was an unfortunate one, as if artists were accountants having their accuracy checked; and the eminent Irish writer Colm Toibin said that the council’s terminology — for example, “working artists engaged in productive practice” — had a North Korean ring about it; an exaggeration, no doubt, given that the North Korean regime subjects its artists to something more severe than mere audit, but one knows what he means. These days it is increasingly difficult to distinguish, stylistically, between an official circular and a page from The Selected Works of Kim Il-sung. (The only one of those communist leaders worth reading, by the way, is Enver Hoxha, who had a wonderful natural gift for poisonous invective and insult. As by the end of his life he had fallen out with everyone, he also had a lot of practice at it; his principle was never to speak well of the dead, especially if he had killed them himself.)

But Mr. Toibin was exercised about the very idea of demanding of artists that they actually produce something in return for the money they receive. After all, many a great artist in the past has had a fallow patch in his life, sometimes lasting decades; you can’t just go to an artist and insist that he be inspired, any more than a photographer can insist that his subjects be natural in front of the lens. His logic appears to be:

Great artists a and b had fallow patches

Artist c is having a shallow patch

Therefore artist c is great and indefinitely worth subsidy

Now, I’m not against patronage as such; sometimes I even wish I had had a patron who had relieved me of the necessity to earn my daily bread (and jam). Then, surely, I would have written an imperishable masterpiece; I would have had time for le mot juste instead of having to make do with the le mot approximatif that mere journalism, as against literature, requires. But the government doesn’t have the taste or discrimination to act as patron. It can’t even choose its advisers well.

May 17, 2017

QotD: Britain’s post-Brexit access to the single market

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

You see, they think they are granting us a privilege by allowing us to sell them things. This is ludicrous of course, it is imports which make us richer, not exports. But let us humour their delusion for a little. The standard EU position is that if the companies and people of a country are to gain access to the Single Market then they must pay for that privilege. This cannot be about the imports that those people gain from the Single Market of course because that is always under their own domestic control. No, the EU’s insistence really is that if Switzerland gets to sell cuckoo clocks into the EU, Norway can ship fermented sharks heads and the like, then this is a privilege. And that access to the Single Market means that Switzerland and Norway must pay the EU for that privilege. And they do.

[…]

If you get to sell things in Europe then you’ve got to pay the tithe to the EU itself. Reminds me rather of Fat Tony and friends running a nice little protection racket but then much of the EU reminds me of that.

OK. But who should be paying that tithe?

Well, actually, the first question is whether that tithe is worth paying. As up above, it’s imports that make us all generally richer and that’s all under our control anyway. Exports do make some people richer – the people who profit from making exports of course. And that’s not us in general, that’s not Britain, nor the British, and it’s most certainly not the taxpayers who are made richer by exports. So, obviously, it should not be the taxpayers paying the tithe in order to gain access to that market for those exports which don’t profit them.

The people who should be paying the tithe are the people who profit from the tithe having been paid. Those very exporters. Which gives us the solution to who should be paying the tithe. And an interesting side effect of this will be that we will find out whether it’s worth paying at all.

The people who should be paying the tithe are the people who profit from the tithe having been paid. Those very exporters. Which gives us the solution to who should be paying the tithe. And an interesting side effect of this will be that we will find out whether it’s worth paying at all.

Actually, we could in fact argue that a payment into the EU budget in return for Single Market access is illegal state aid. And thus not allowed under the usual rules of trade with the EU. Because it is state aid. Exporters will face tariffs if the payment is not made. The payment thus benefits exporters. But the payment is made by taxpayers, this is thus aid from taxpayers to exporters. It’s a subsidy for exports – something that isn’t allowed.

[…]

The crucial point is that the benefits, as far as the UK is concerned, of Single Market access lie with those making the exports. Thus those making the exports should be those paying the cost of Single Market access. If those who benefit think it not worth the cost then no one should be paying such bribes illegal state aid access fees. And simply by applying the costs, correctly, to those who benefit we find out which is the truth.

It’s very difficult indeed, nay impossible, to see the down side of this suggestion. If exporters want Single Market access then exporters can pay for it, not taxpayers. If they won’t pay it then it’s not worth it, is it?

Tim Worstall, “Absurd But It Works – Ensure EU Single Market Access Post-Brexit With Export Taxes”, Forbes, 2016-06-27.

May 3, 2017

Softwood lumber, again

Filed under: Business, Cancon, Economics, USA — Tags: , , , — Nicholas @ 03:00

Last week, Megan McArdle provided a quick look at the son of the bride of the revenge of the softwood lumber dispute monster:

According to American lumber producers, this is because of the nefarious subsidies the Canadian government has granted to its timber producers. In America, most softwood timbering takes place on private land, and the lumber is priced to recover the full cost of owning and maintaining many acres of trees. In Canada, forest resources tend to be owned by the government, which sets “stumpage fees” (the cost for cutting down a tree, which used to be assessed per stump and is now usually assessed by board feet or cubic meters [PDF]).

The American producers complain that these fees are set too low, providing an unfair subsidy for Canadian timber, especially because British Columbia (which has a lot of timberland) bans the export of Canadian logs, so that American lumber mills are unable to get in on this sweet, sweet deal.

For variety, American producers occasionally also complain that Canada is “dumping” (basically meaning that a country is selling goods in a foreign market below the price at home. Since this is — except in rare cases such as pharmaceuticals — a stupid business practice, accusations of dumping tend to exceed actual instances by a healthy margin.)

[…]

The history of litigation on this is long, rich and arcane. Since the 1980s, the U.S. and Canada have been locked in a cycle whereby the U.S. complains that Canadian softwood lumber is too darn cheap, complaints are filed with various entities, and eventually both sides decide it’s easier to come to some sort of settlement rather than subject everyone to another endless hearing on the minutiae of the lumber industry. Then an agreement expires, American lumber producers say “Now’s our chance, guys! We’re going over the top!” and the magical cycle of birth and death, conflict and resolution, begins once again in the forest lands.

When trade bodies get around to ruling, those rulings are often mixed: “Yeah, okay, maybe there’s some subsidy in there somewhere, but you Americans are wildly overreacting, so cool it with the huge tariffs.” Which was basically my take on the dispute in 2004, when I last covered it. Research does not reveal any good reason to revise that view, especially because Canadian stumpage has evolved somewhat over the years. British Columbia now uses auctions [PDF] in its coastal forest areas, which should tend to drive the price of stumpage there to par with the world market.

We should also note that any subsidy, however bad for American softwood lumber producers, is actually good for the vast majority of Americans who do not work in forestry. This morning, people were throwing wild numbers around about how much a tariff would increase the price of a house or a box spring. I’d take those numbers with a hefty dose of salt, but undoubtedly, they will drive the price of softwood lumber products up somewhat, which means less money in the pocket of you, The Modern American Consumer. So even if American timber producers were completely right and their tariff were warranted, the American consumer would suffer.

March 30, 2017

Words & Numbers: The Arts Will Survive Without Your Taxes

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

Published on 29 Mar 2017

This week, James & Antony experiment with a slightly longer format, and get into the issue of government funding for the arts.

March 14, 2017

“Most policy ideas are bad” (especially in US healthcare)

Filed under: Government, Health, Politics, USA — Tags: , , , , , — Nicholas @ 03:00

Megan McArdle says that the best plan the Republicans could come up with to deal with Obamacare is to do nothing, at least in the short-term:

For a policy columnist, “Don’t do that” is the easiest column to write. Most policy ideas are bad. If you simply blindly oppose everything that anyone ever puts forward, you’ll end up being right most of the time.

However, that’s not very useful for politicians. If they just sit around Congress playing tiddlywinks all day, voters will get cranky. Congress is supposed to do things. So, having spent a few days saying unkind things about the Republican health-care plan, it probably behooves me to state what I think they should do.

Well, boy, that’s a hard question. Here’s the thing: For all the unkind words I’ve said, I get the forces that have brought Republicans to this point. As I wrote Thursday, Democrats built a shoddy and unworkable structure out of the political equivalent of concrete: nearly impossible to repair or renovate, and darned expensive to demolish. The task is made even harder by the fact that Democrats currently control just enough votes in the Senate to keep Republicans from passing any sort of clean, comprehensive bill.

[…]

What would I do in this situation? Well, the first thing I’d do is accept, deep in my heart, that there are no great outcomes possible at this point. The second thing I’d do is remember that nothing is always a policy option: If you can’t do something better than the status quo, don’t do anything. It’s what I said to Democrats in 2009, and it’s what I’m saying to Republicans now.

So what would I do to minimize the damage, within the constraints of political reality? Well, I foresee two potential futures for the current status quo. One, the exchanges where individuals buy policies could fail, leaving people unable to buy insurance. Or two, the exchanges don’t fail, and we’re left with an unsatisfactory but still operational system.

In either case, the Republicans’ best option is to wait. Why? Because what they can do now — hastily, without touching the underlying regulations that have destabilized the individual market — is worse than either of those outcomes. The partial-reform structure they think they’ll be able to get through the Senate is likely to make the problems in the individual market worse, not better. And the fact that they’ve tinkered with the program means that Republicans will take 100 percent of the blame.

She also re-iterates her own ideal solution (which she admits wouldn’t fly with the American public):

Longtime readers of my column know that my pet proposal is a radical overhaul of the whole system in which we zero out all the existing subsidies and just have the government pick up 100 percent of the tab for medical expenses that exceed 15 or 20 percent of a family’s adjusted gross income: basically, a single-payer catastrophic-care system for expenses that no one can realistically save for. Let people buy insurance for expenses below that, or, if it’s not too expensive taxwise, let people set aside more money tax-free in Health Savings Accounts. And make some more generous provisions for people closer to the poverty line, such as prefunding Health Savings Accounts for them. That’s the whole program. It fits on a postcard, though the finer details — like which cancer treatments we’re actually willing to pay for — obviously aren’t.

However, this is completely politically infeasible, because voters don’t want genuine insurance, by which I mean a pool that provides financial assistance for genuinely unforeseeable and unmanageable expenses. Voters want comprehensive coverage that kicks in at close to the first dollar of spending, no restrictions on treatments or their ability to see a doctor, nice American-style facilities, and so forth. They are also fond of their health-care professionals and do not wish to see provider incomes slashed and hospitals closed, nor do they want their taxes to go up, or to pay 10 percent of their annual income in premiums. This conflicting set of deeply held views is one major reason that Obamacare — and American health-care policy more generally — has the problems it does.

February 19, 2017

NFL tries to bully Texas … here’s how Texas should respond

Filed under: Economics, Football, Government — Tags: , , , , — Nicholas @ 02:00

At Ace of Spades H.Q., Ace offers some advice to Texas or to any other state on the receiving end of some NFL “persuasion”:

Texas Governor to NFL: Worry About Your Own Spousal Abuse Scandals Before You Go Dictating to Us That We Need to Allow Penises in the Ladies’ Rooms

The NFL warned a Texas that a bill proposed in its senate — which would reserve bathroom use to the “biological sex” indicated on the door — might jeopardize Texas from getting to host any future Super Bowls.

Governor Greg Abbot had some words for the NFL.

However, if Texas, or any other state, wishes to bar professional sports teams from ever attempting to blackmail them into what laws they can and cannot pass or enforce, I have a much more powerful corrective.

States should begin proposing this law:

No municipality shall have the authority to issue any bonds, or direct any public monies, towards the construction of any arena, stadium, or venue of any type intended partially for use by a private company, unless permission to do so is first granted by an act of the state legislature itself or a statewide referendum affirmatively permitting such a corporate-enrichment boondoggle.

Municipalities are delegated whatever powers of the state the state wishes to confer upon them. Municipalities, you may or may not know, act with the power of the state when they pass ordinances and tax bills and such — but that power derives from the reservoir of powers the state possesses, and which the state has conferred upon them via charters of incorporation.

Those powers can be circumscribed, expanded, limited, or cancelled.

You don’t have to include that last part, the part about the legislative or popular referendum override of the general forbiddance, but that could be thrown in there for RINOs who really do want to do favors for corporate bullies and who therefore won’t vote for such a bill without an escape clause.

When the states get serious about simply cutting off cities’ rights to issue bonds or directly subsidize, with taxpayer money, the new stadiums these free-riding vulture socialists are always demanding, then you’ll see the NFL and NBA adopt a much less high-handed tone.

Previous posts about the economic idiocy of local or state governments subsidizing billionaire sports team owners here, here, and here.

February 17, 2017

Industrial policy example – Kingston, Ontario

Filed under: Business, Cancon, Germany, Government, Railways — Tags: , , , , — Nicholas @ 05:00

David Warren remembers when the government tampered with the free market to “save an industry” in Kingston:

Once upon a time, many years ago, I scrapped into one of these “no-brainer” political deals. The remains of the locomotive manufacturing business in Kingston, Ontario — whose century-old products I had glimpsed, still on the rails in India — were now on the block. A monster German corporation was offering to buy them, for the very purpose of competing, in Canada, with a (hugely subsidized, monopolist) Canadian corporation. The government stepped in, to “save” a Canadian industry, retroactively change the ground rules, and kick in more subsidies so that the Canadian monopolists, based in Montreal, could take over instead. This was accompanied by nationalist rhetoric, and Kingston was thrilled. Critics like me were unofficially deflected with bigoted anti-German blather held over from the last World War.

But I knew exactly what was going to happen. The local works, which would have been expanded by the foreign owner, were soon closed by the new Canadian owner, after studies had been commissioned to “prove” it was uneconomic. The latter’s last possible domestic competitor was thus snuffed out. The locals, whose lives had been for generations part of a proud Kingston enterprise, had been suckered. The politicians had told them it was little Canada versus big Germany. In reality, it was pretty little Kingston versus big ugly Montreal.

That is how the world works, with politics, so that whenever I hear of a big new national no-brainer scheme, my first thought is, which innocents are getting mooshed today?

January 1, 2017

QotD: Currency Manipulation

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

One of the critiques of any trade deal of late is that there should be penalties for countries guilty of “currency manipulation.” The concern is that countries will devalue their currency in an effort to make their own exports cheaper to other nations while making it harder for other countries to export back to them. As an example, if the Chinese were to do something that cuts the value of the Yuan in half vs. the dollar, their products look very cheap to American consumers while American-produced goods suddenly look a lot more expensive to Chinese consumers.

I have two brief responses to this:

  1. I find it hilarious that anyone in the United States government, which has a Federal Reserve that has added nearly $2 trillion to its balance sheet in the service of cramming down the value of the dollar, can with a straight face accuse other nations of currency manipulation. In practice in today’s QEconomy, currency manipulation means another country is doing exactly what we are doing, but just doing it faster.
  2. As an American consumer, to such currency manipulation by other countries I say, Bring it On! If China wants to hammer its own citizens with higher prices and lower purchasing power just to subsidize lower prices for me, I am happy to let them do it. Yes, a few specific politically-connected export businesses lose revenues, but trying to prop them up is pure cronyism. Which is one reason I think Elizabeth Warren is a total hypocrite. The constituency of the poor and lower middle class she presumes to speak for are the exact folks who shop at Walmart and need very price break on everyday goods they can get. Senator Warren’s preferences for protectionist trade policies and a weak dollar will hurt these folks the most.

Warren Meyer, “Currency Manipulation”, Coyote Blog, 2015-05-26.

November 30, 2016

Minnesota’s generous (hidden) gift to six government-appointed MFSA officials

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

Minnesota taxpayers contributed nearly half of the costs to build the new stadium that the Minnesota Vikings call home (“one of the largest public subsidies ever given to a sports facility”). The state government appointed a six-person board to negotiate the state’s share of the costs. Now, it comes to light that those six people get free luxury suite tickets to not only Viking home games, but every event held at the stadium:

Six government appointees, including the son of a vice president, who negotiated how much public money would be spent building the Minnesota Vikings’ new football stadium get free access to luxury boxes for all events in the stadium.

Which, you know, might call into question how hard they really negotiated for the taxpayers on that one.

The Minneapolis Star-Tribune reports that the six members of the Minnesota Sports Facilities Authority (MSFA), the quasi-government agency created in 2012 to oversee the public subsidies for the building of U.S. Bank Stadium, get free tickets to two lower-level luxury suites for all events held there. Even though taxpayers covered more than half of the cost of the $1.1 billion stadium, which opened earlier this year, the public is being kept in the dark about who occupies those 36 seats and the adjoining luxury suites during Vikings home games and other events.

The team claims that the suites are used for “marketing purposes,” but the Star-Tribune‘s investigation found that family and friends of the board members are usually in attendance too.

Maybe the best part of the story is the moment when two members of the MSFA board (chairwoman Michele Kelm-Helgen and executive director Ted Mondale) try to justify their sweet, free, and secret perk by arguing that they “work long hours on game days and spent long nights negotiating on behalf of taxpayers during construction of the building, so having friends and family there is reasonable.”

[…]

For anyone who isn’t part of this special cadre of insiders getting special access to the suites for free would have to shell out more than $20,000 for season tickets in similar suites at the stadium. Since the six members of the MSFA board also have access to the suites for all other events at the stadium, the actual value of their seats is in excess of that figure.

The whole thing raises ethical questions since public officials in Minnesota are not allowed to receive gifts, including special privileges or access not otherwise available to the general public. That gift ban has a loophole allowing public officials to accept such special freebies if it’s part of their official duties.

As I wrote back in 2012:

As you’ll know if you’ve read the blog for any length of time, I’m a big fan of the Minnesota Vikings, despite never having lived there or even visited the state. I’d be very upset if they became the L.A. Vikings. But I also totally sympathize with Minnesotans who don’t want their taxes being used to give corporate welfare to the billionaire owner of the football club. Pouring money into facilities for professional sports teams is one of the very worst ways to use tax dollars, as the lads at Reason.tv explain:

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