It’s not that I don’t want smaller government. I’m a libertarian; my ideal government is about the size of one of those miniature dogs that have to wear coats all the time because they don’t generate enough body heat to keep themselves warm. The problem is, the voters don’t want smaller government. They’d like to pay lower taxes, of course, but they go wild if anyone suggests cutting any sizeable portion of the services that those taxes pay for. By and large, politicians have refused to cut spending anyway. And without doing so, you can’t have a tax cut in any real sense, because to spend is to tax (eventually).
Megan McArdle, “Trump Tax Cuts: A Bad Idea With a Bright Future”, Bloomberg View, 2016-12-01.
December 15, 2016
QotD: Why reducing the size of government is so tough
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December 14, 2016
Niall Ferguson’s “Bremain” recantation
Niall Ferguson regrets sacrificing his principles to help his friends stay in power:
The three words you are least likely to hear from an academic are “I was wrong.” Well, I was wrong to argue against “Brexit,” as I admitted in public last week. By this I do not mean to say “I wish I had backed the winning side.” Rather, I mean “I wish I had stuck to my principles.”
For years I have argued that Europe became the world’s most dynamic civilization after around 1500 partly because of political fragmentation and competition between multiple independent states. I have also argued that the rule of law — and specifically the English common law — was one of the “killer applications” of western civilization.
I was a staunch Thatcherite. I was a proud Eurosceptic. So what on earth, many old friends wondered, prompted me to take the side of “remain” in the referendum on EU membership?
A part of the answer is that I sincerely convinced myself that the costs of Brexit would outweigh the benefits. But I too readily trotted out the doom-laden projections of a post-Brexit recession from the International Monetary Fund, the Treasury, and others. I accused the proponents of Brexit of being “Angloonies” as opposed to Eurosceptics. My most desperate sally was to compare Brexit to a divorce — desperate not because the analogy is a bad one (it still fits rather well) but because I myself am divorced.
I linked to his divorce analogy at the time:
I suppose there are such things as amicable divorces. Mine wasn’t. Like the First World War, it was fought for more than four years, and ended with the Treaty of Versailles (by which I mean that it imposed territorial losses and the payment of annual reparations for a very long time).
Which brings me to Brexit, the ultimate divorce. Leave aside the arguments based on economics. Leave aside history, too. Instead, permit me to get personal. You want to get a divorce from Europe? Very well, let me explain what divorce is like.
Ouch.
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Econ Duel: Why Is the Rent So Damn High?
Published on 13 Dec 2016
This week: Matt Yglesias and Tyler Cowen in a brand new Econ Duel.
Next week: Another Econ Duel! Scott Sumner and Larry White will take on monetary policy.
You’ve no doubt heard it before: the rent is too damn high!
In major cities across the United States, rent prices have been skyrocketing for some time. As a percentage of median income, rent is much higher for those that choose city life over suburbia.
But why are rental prices in these cities so expensive, and what can we do about it?
It’s a classic case of supply and demand: lots of people want to move to big cities because of the opportunities they afford. Naturally, they demand housing. But the supply is often short due to many factors, from geography to regulations. What does economics tell us happens when there’s a lot of demand, but not so much supply? Prices rise. As a consequence, many people are priced out of pursuing the lucrative opportunities available in major cities.
Coastal cities, like San Francisco and New York, have obvious geographical restrictions on building “out.” One way to deal with this problem is to build upwards with more skyscraper housing. This often isn’t feasible due to regulations on building heights, density, parking requirements, etc. But these regulations could be lessened or removed, allowing big cities to become denser and lowering rent prices. Lifelong city-dweller Matt Yglesias discusses this approach in this Duel.
On the other side, Tyler Cowen, who has always lived in the suburbs, argues that allowing cities to become denser may only provide a short-term solution. As more people move in, the cities become more productive with higher incomes for their inhabitants. And the rents rise again.
Of course, we’ve merely skimmed over the arguments here, and you’ll have to watch the Econ Duel to get the full picture! Check it out and let us know in the comments who you think makes a better case.
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QotD: Fill-in-the-blank OECD fun
When writing about the Organization for Economic Cooperation and Development, an international bureaucracy based in Paris, my life would be simpler if I created some sort of automatic fill-in-the-blanks system.
Something like this.
The OECD, subsidized by $____ million from American taxpayers, has just produced a new _________ that advocates more power for governments over the _________ sector of the economy.
But this may not be sufficiently descriptive.
So maybe I should create a multiple choice exercise. Sort of like when students take tests and get asked to circle the most appropriate answer.
The bureaucrats at the Paris-based OECD, working in cooperation with union bosses/class-warfare advocates/other tax-free international bureaucrats/politicians, have released a new report/study/paper urging more power/control/authority for governments in order to increase regulation/taxes/spending/redistribution/intervention.
You may think I’m trying to be funny, but this is totally serious.
How else would you describe a bureaucracy that consorts and cooperates with leftist groups like Occupy Wall Street and the AFL-CIO and routinely published propaganda in favor of Obama’s agenda on issues such as global warming, government-run healthcare, so-called stimulus, and class-warfare taxation.
And never forget that American taxpayers finance the biggest chunk of this bureaucracy’s budget.
Adding insult to injury, the bureaucrats at the OECD get tax-free salaries, which makes their relentless support for higher taxes on the rest of us even more obnoxious.
Dan Mitchell, “More Statist Propaganda from the Taxpayer-Funded OECD”, International Liberty, 2015-04-12.
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December 13, 2016
Tom Kratman on the appointment of James Mattis as Secretary of Defence
Even though Kratman is retired Army, he seems positive about the Mattis appointment … under certain circumstances:
I don’t have really strong personal feelings against the idea of retired Marine General James Mattis becoming Secretary of Defense. He’s got to be a step up from the now normal western approach to defense, which is to put a broad-smiling woman or metrosexual in charge, keep the name, but make the office’s mission to be the secretary of political correctness, inclusivity, social justice, gender neutrality, gender integration, straight male moral castration, Muslim terrorist infiltration assistance, and pretty much anything but defense. Moreover, assuming Mattis takes the job, he’s a better man than I am; I wouldn’t take it without a fistful of signed but undated pardons and a liberal supply of ammunition. I think he – or anyone – purporting to fix Defense needs to shoot some people. No, not fire, not counsel, not yell at; shoot. Otherwise, the bureaucracy in the five-sided puzzle palace, the Navy Annex, and the various high rises in the area leased by the various services, will obfuscate, delay, deny, lie…whatever it takes to keep nothing from changing, especially their own power. Hmmm…did I say “some people”? Let me rephrases; he’s going to need to shoot a lot of people and probably will need a large rucksack full of signed but undated pardons, plus a graves registration unit, not too well trained, to truck the bodies to the Potomac and dump them.
Excuse me a moment, but the idea of a very large number of bureaucrats, in and out of uniform, being summarily shot and then having their bodies unceremoniously dumped in the Potomac to float out to sea has given me the schadenboner of all schadenboners…I need a bit to let it subside.
Ah, all better…well mostly better…now. At least I can continue with the column.
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The Design of Przemyśl Fortress – Walking Through The Old Forts I THE GREAT WAR Special
Published on 12 Dec 2016
Thank you Tomasz Idzikowski for showing us Fort I and XV in great detail. Definitely check out his books if you speak Polish.
We spend several days in Przemyśl in August 2016 and took a walk through the well preserved forts around the city that you know from our show.
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“Canadian National was using Metrolinx as an automated teller machine”
The two big Canadian railway corporations have taken full advantage of the weak internal financial controls at Metrolinx:
For much of the past two decades Canadian National Railway Co. has been credited with revolutionizing the North American railroad industry.
The company’s former chief executive E. Hunter Harrison’s theory of “precision railroading” — a data-driven focus on charging customers a premium for superior on-time performance — made him an industry icon and his shareholders very happy.
But in railroading, as in life, how you get there matters.
Acting on a tip, the Southern Investigative Reporting Foundation began investigating Canadian National in the fall of 2014. Here’s what our reporting uncovered:
- For over 15 years Canadian National earned hundreds of millions of dollars in profit by marking up rail construction costs up more than 900 percent to a public-sector client.
- Canadian National regularly engaged in questionable business practices like charging internal capital maintenance and expansion projects to the same taxpayer-funded client and billing millions of dollars for work that was never done.
- A just-released auditor general investigation suggested a series of reforms that will reduce these profits.
- For years, train yard personnel, under intense pressure from management, have intentionally misreported on-time performance, helping it boost revenues by hundreds of millions of dollars.
[…]
Long before the Ontario auditor general’s office began its investigation, Canadian National was using Metrolinx as an automated teller machine, albeit one with no deposits required. Over 15 years executive teams have come and gone at Canadian National but the one constant has been the river of profit that its Toronto construction unit has been able to reliably wring from Metrolinx.
Determining how much Canadian National has billed Metrolinx over the past two decades is difficult but since 2010, adding up four separate land sales, the Lakeshore West construction discussed below and ongoing maintenance contracts it’s at least $1.1 billion, the majority of which likely went straight to operating income. In other words, Metrolinx’s long-running failure to properly scrutinize Canadian National emboldened it to charge prices so high that many of the construction and maintenance contracts amounted to almost pure profit.
The most audacious episode occurred from 2004 to 2008 when Canadian National’s construction managers developed a billing scheme that reaped hundreds of millions of dollars in profits and benefits by wildly inflating the cost of construction, according to documents obtained by the Southern Investigative Reporting Foundation and attached to ongoing litigation.
The project involved a track expansion project that Canadian National performed for Metrolinx’s Lakeshore West line, on a route that stretched about 40 miles from Hamilton, Ontario, to Toronto’s Union Station. The work was completed in 2012.
Windfall profits and bonus payouts weren’t the half of it. In numerous instances Canadian National billed Metrolinx for work that Canadian National did for its own capital maintenance and expansion projects, saving itself many millions of dollars in expenses.
From 2004 to 2008, Canadian National did track construction work for Metrolinx on a 4.5-mile stretch between the Burlington and Hamilton stations, referred to by Canadian National as Lakeshore West/West. On a separate stretch of the same track in late 2009, crews began adding track to the 9.1-mile stretch from the Port Credit station to Kerr Street, or the Lakeshore West/East line. (The Ontario auditor general’s annual report discussed an unnamed 9-mile track extension that cost $95 million to construct “on the Lakeshore West corridor” but did not identify the project’s location or its date of completion.)
The Lakeshore West/West project’s cost is unclear.
Based on this email, Metrolinx had originally approved a construction price tag of $45 million, but in short order the project’s chief engineer Daryl Barnett, in a bid to reduce costs, noted the price tag had quickly ballooned past $70 million. Metrolinx’s spokeswoman Aikins did not answer repeated questions on the matter but the Southern Investigative Reporting Foundation obtained an April 2015 internal audit Metrolinx conducted at the auditor general’s request that put the final tab for Canadian National’s 2004 to 2008 work on that stretch at “over $200 million.”
GO Transit operates bus and rail service in the Greater Toronto Area as part of Metrolinx
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QotD: In combat, there’s nothing new under the sun
Ultimately, a real understanding of history means that we face NOTHING new under the sun.
For all the “4th Generation of War” intellectuals running around today saying that the nature of war has fundamentally changed, the tactics are wholly new, etc, I must respectfully say … “Not really”: Alex the Great would not be in the least bit perplexed by the enemy that we face right now in Iraq, and our leaders going into this fight do their troops a disservice by not studying (studying, vice just reading) the men who have gone before us.
We have been fighting on this planet for 5000 years and we should take advantage of their experience. “Winging it” and filling body bags as we sort out what works reminds us of the moral dictates and the cost of incompetence in our profession. As commanders and staff officers, we are coaches and sentries for our units: how can we coach anything if we don’t know a hell of a lot more than just the [Tactics, Techniques, and Procedures]? What happens when you’re on a dynamic battlefield and things are changing faster than higher [Headquarters] can stay abreast? Do you not adapt because you cannot conceptualize faster than the enemy’s adaptation? (Darwin has a pretty good theory about the outcome for those who cannot adapt to changing circumstance — in the information age things can change rather abruptly and at warp speed, especially the moral high ground which our regimented thinkers cede far too quickly in our recent fights.) And how can you be a sentinel and not have your unit caught flat-footed if you don’t know what the warning signs are — that your unit’s preps are not sufficient for the specifics of a tasking that you have not anticipated?
Perhaps if you are in support functions waiting on the warfighters to spell out the specifics of what you are to do, you can avoid the consequences of not reading. Those who must adapt to overcoming an independent enemy’s will are not allowed that luxury.
General James ‘Mad Dog’ Mattis, quoted by Geoffrey Ingersoll, “General James ‘Mad Dog’ Mattis Email About Being ‘Too Busy To Read’ Is A Must-Read”, Business Insider, 2013-05-13.
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December 12, 2016
Vikings beat Jaguars 25-16 to keep playoff hopes (barely) alive
I knew I wasn’t going to be able to watch Sunday’s game even if it was broadcast in the Toronto area, as I’d promised to head down to Burlington to bring my mother to our place for the holidays. This means my Twitter feed was completely empty of my traditional game-related tweets on Sunday afternoon (you’re welcome, guys).
After dropping two games to the Detroit Lions, the Vikings are looking at a wildcard rather than the NFC North title to get them into the post-season. Even getting the wildcard pretty much requires the Vikings to win all of their remaining games (and still will likely need some help), which will be a challenge with an offensive line consisting of a hay bale, a regional champion mannequin challenge player, a scarecrow, a mime with a nasty makeup-related skin condition, and young Bobby McFarlane (the backup right tackle at Our Lady of Hopeless Causes High School in Mankato, MN). Honestly, it’s a genuine miracle that Sam Bradford is still alive at this point in the season … and keeping him alive for the last quarter of the season will be a double miracle.
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Siege of Przemyśl – Summary I THE GREAT WAR Special
Published on 11 Dec 2016
This is the prologue of our episodes filmed at Przemyśl. Indy summarises all the events relevant to the two Sieges of Przemyśl and the battles in the region. In the next instalment we will dive into the details of the fort design and explore the live of the soldiers in the forts.
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Refuting Piketty’s call for revolution, again
Tim Worstall points out that Thomas Piketty has mis-diagnosed the “problem” of rising capital:
The report shows that there were 13 OECD countries in which assets in funded pensions represented more than 50% of GDP in 2015, up from 10 in the early 2000s. Over the same period, the number of OECD countries where assets in funded private pension arrangements represent more than 100% of GDP increased from 4 to 7 countries.
We’re living longer lives these days, we’re working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises – not to produce inheritances, but to produces incomes in retirement. And rises by potentially at least more than 100% of GDP.
We can’t see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.
So much for the most recent French call for revolution then, eh?
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December 11, 2016
Re-negotiating NAFTA (and the Defence Production Sharing Program, too)
Ted Campbell is in favour of bringing NAFTA up-to-date and reminds us that there’s another diplomatic item that could use modernization at the same time:
In my opinion, if Prime Minister Justin Trudeau, or the next Conservative leader is really interested in restoring Canada to a leading position in real, practical, long term peacekeeping then (s)he will abandon the United Nations and, instead, turn Canada into a free trade powerhouse by dropping our remaining protectionist measures, as Maxime Bernier and Colin Robertson both advocate, and making deals with all comers. And it is important to remember that “deals” involve two sides and both sides must gain something which means that both sides probably “give” something, too, and that produces short term “losers” and it is politically important to try to “soften” the transition for those who are bound to lose in the short term. But, in the mid to long term most losses are “covered” by gains in new products and services and the utilitarian goal of “the greatest good for the greatest number” is achieved … most of the time.
One of the things Colin Robertson mentioned was shipbuilding and it leads me to consider that one of the things we want to renew if or when we must renegotiate NAFTA is the Defence development sharing agreement between Canada and the United States of America. The stated objective of the existing (since 1963) agreement are:
- To assist in maintaining the Defense Production Sharing Program at a high level by making it possible for Canadian firms to perform research and development work undertaken to meet the requirements of U.S. armed forces.
- To utilize better the industrial scientific and technical resources of the United States and Canada in the interest of mutual defense.
- To make possible the standardization and interchangeability of a larger amount of the equipment necessary for the defense of United States and Canada.
The Defence Production Sharing Program is, too often, hamstrung by US (and Canadian) protectionist measures and it needs to be brought more fully into the area of bilateral free trade. I am not suggesting that the Pentagon would ever let, say, a significant shipbuilding contract to a Canadian yard but it must be possible for Canadian shipyards and factories and service providers to bid on US defence contracts on at least a “near equal” basis and vice-versa, of course. This, free(er) trade in defence materiel and services is one area where we, North Americans, can learn from the Europeans. I am not suggesting that Canada should abandon the idea of having a national defence industrial base but, rather, that we should have a base that fits, neatly, into a larger continental base that is, somehow, connected to other allied defence production systems.
So, broadly, when (if) President elect Trump says he wants to renegotiate NAFTA we should, indeed, say “bring it on!” But we should go into negotiations with our eyes wide open, prepared to surrender some “losers,” as good bridge players do, in order to finesse some winners for ourselves.
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Baltic Sea Battles – Tanks On Other Fronts I OUT OF THE TRENCHES
Published on 10 Dec 2016
Indy sits in the Chair of Wisdom again to answer your questions about World War 1. This week we talk about naval battles in the Baltic Sea and the use of tanks on other fronts than the Western Front.
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Polynesia
In reviewing the recent Disney movie Moana, Steve Sailor provides a thumbnail sketch of the amazing story of pre-contact Polynesia:
Perhaps the best analogue so far in human history to settling the galaxy has been the Polynesians’ audacious colonization of the far-flung islands of the Pacific. They repeatedly escaped the Malthusian trap by expanding their territories. Unusually for humans, sometimes they didn’t even have to steal their acquisitions from anybody else.
When Mediterranean sea captains began to venture into the Atlantic at the beginning of the Renaissance, they found that most of the small number of islands were uninhabited. The Vikings had settled Iceland, and Stone Age Berbers were living on the Canary Islands, but desirable islands such as the Azores and Madeira were still empty.
Yet when 16th-century Europeans reached the much wider Pacific, it was difficult to find an island that wasn’t already densely populated. Even remote Pitcairn Island, where the mutineers on the Bounty found refuge, appears to have been previously settled by Polynesian mariners.
Over the past half century, Western researchers, such as U. of Hawaii anthropologist and space scientist Ben Finney, have sponsored a revival of traditional islander talents at wayfinding from one known point to another.
But that still leaves the question of how the Polynesians discovered unknown islands. Presumably they followed birds and studied hints in the clouds and ocean swells?
In Moana, the prehistoric Polynesians have pioneered deep into the Pacific to islands such as Tonga and Samoa, only to have then settled down and turned their backs on the sea. Musker explains, “For thousands of years, they were great voyagers; and then there’s a thousand-year pause where they didn’t voyage.”
Suddenly, the Polynesians regained their dynamism and settled a vast triangle of the Pacific almost 5,000 miles per side, from New Zealand to Easter Island to Hawaii, with Tahiti in the middle as the jewel in the crown.
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