Quotulatiousness

January 10, 2011

Kelly McParland on the bad old LCBO

Filed under: Bureaucracy, Cancon, History — Tags: , — Nicholas @ 12:22

Kelly McParland contrasts the Ontario government’s treatment of alcohol and tobacco as they’ve reversed position over time:

Ontario’s government-owned liquor monopoly operated bleak little dispensaries that had all the allure of an all-night pharmacy. No actual booze was allowed to be displayed, for fear the merest glimpse might turn solid citizens into a blubbering mass of addiction. You elbowed your way up to utilitarian counters with display boards that listed the limited products deemed acceptable for purchase. Using stubby little pencils, you scribbled down the name and code of the offending brand, then stood in line with similarly sad-sack individuals and handed your little list to a disapproving civil servant, who sent someone off to fetch your bottle and wrap it in a brown paper bag so as not to alarm any passing school marms or Sunday school teachers.

That was before the Ontario government realized just what a gold mine it had on its hands, and began redesigning liquor stores to serve as candy stores for grown-ups. Now there are free samples when you enter, kitchens to pass on recipes that encourage you to eat your booze as well as drink it, snob sections for high-priced wines and whiskies, and aisles full of expensive imported brews and hard-to-obtain craft beers, for people who only drink beer but want to feel just as snooty as everyone else.

I wrote about the bad old days of the LCBO back in my first year of blogging:

A few elections ago, the Ontario government under Premier Mike Harris started talking about getting the government out of the liquor business. The LCBO, which up until that point had operated like a sluggish version of the Post Office, suddenly had plenty of incentive to try appealing to their customers. Until the threat of privatization, the LCBO was notorious for poor service, lousy retail practices, and surly staff. Until the 1980’s, many LCBO outlets were run exactly like a warehouse: you didn’t actually get to see what was for sale, you only had a grubby list of current stock from which to write down your selections on pick tickets, which were then (eventually) filled by the staff.

If the intent was to make buying a bottle of wine feel grubby, seamy, and uncomfortable, they were masters of the craft. No shopper freshly arrived from behind the Iron Curtain would fail to recognize the atmosphere in an old LCBO outlet.

During the 1980’s, most LCBO stores finally became self-service, which required some attempt by the staff to stock shelves, mop the floors, and generally behave a bit more like a normal retail operation. It took quite some time for the atmosphere to become any more congenial or welcoming, as the staff were all unionized and most had worked there for years under the old regime — you might almost say that they had to die off and be replaced by younger employees who didn’t remember the “good old days”.

Now, contrast that with the way tobacco products — which used to be sold just about everywhere (and to anyone) — are now the pariah of the retail world:

Meanwhile, anyone desperate enough to buy a pack of cigarettes has been reduced to the status of those sorry, forlorn customers who used to slip into LCBOs hoping not to be recognized. The latest government regulations will increase the size of the warning labels and the sheer gore of the illustrations. To catch a glimpse of the rotting teeth and ulcerated organs you have to ask someone to fetch you a pack from the nondescript, unlabelled shelves behind the counter, where they used to keep the dirty magazines before we started getting our porn free online. Fierce competition and viticultural advances have relentlessly pushed down the price of booze so that wholly acceptable products are available at ever more reasonable prices; tobacco prices, meanwhile, are so prohibitive they’ve spawned a cross-border smuggling trade that would have impressed Al Capone.

I’m not kidding about the “sold to anyone” line either: I was regularly sent to the store to buy cigarattes for my parents even before I was in my teens. The odd punctilious shopkeeper would occasionally require a note from an adult, but generally they didn’t even bother asking.

January 7, 2011

How not to handle public health issues like influenza

Filed under: Bureaucracy, Health, Media — Tags: , , , , , — Nicholas @ 09:38

I was astonished to hear a radio reporter yesterday admit that much of the reason for the drop in people getting flu shots is the massively overblown oh-my-god-we’re-all-going-to-die media panic last year over Swine flu H1N1. In case you somehow managed to miss out on it last year, every news broadcast seemed to feature yet another doctor or public health official telling us that we faced a worldwide pandemic of H1N1 which was the invincible, all-conquering Überflu to top all plagues we’d ever faced before. Death tolls in the millions were confidently predicted. Every individual who died seemed to be mentioned personally . . . because there were so relatively few compared to those poor folks who died of “ordinary” seasonal flu.

Lorne Gunter gives a bit of credit where it’s due:

Give Allison McGeer credit for being frank about what’s behind this winter’s flu outbreak in Ontario: unnecessary panic over last year’s swine flu “pandemic.” Dr. McGeer, head of infection control at Toronto’s Mount Sinai Hospital, says flu cases are way up this season because vaccinations are way down; and vaccinations are way down, likely, because too much was made of the swine flu by media and officialdom last winter.

It is a medical case of the doctors who cried wolf, in other words.

[. . .]

There is a fine line between erring on the side of caution and crying wolf. And last year, the UN’s World Health Organization (WHO) blew through that barrier with abandon.

Just as it had on SARS and bird flu and the Ebola virus, the WHO overreacted to swine flu, issuing cautions that were out of all proportion to the risk the disease posed to the public. (Remember in 2003 when the WHO recommended people from around the world stay away from Toronto because the city was host to a few hundred SARS infections?)

But unlike those earlier panics, the WHO pulled out every stop on swine flu. It was as if the UN agency had been surprised that its earlier scares had failed to grow into full-blown pandemics; and so they figured that, finally, swine flu was due to become a worldwide infection requiring a dramatic response from international health officials.

As I wrote last year in May, when even the most panic-stricken media outlets were no longer playing the JuggernautOfDoom theme:

This would have been a good opportunity for de-escalating the panic mongering (and perhaps even attempting to rein-in the media, who were equally to blame for the tone of the information getting to the public). They chose, instead, to actively hide the fact that H1N1 cases were running below the level of ordinary seasonal flu cases (total H1N1 deaths: approximately 18,000 — typical annual death toll from seasonal flu: 250,000-500,000).

The biggest problem isn’t that they over-reacted this time, it’s that it has reduced their credibility the next time they start issuing health warnings. And that’s a bad thing. Unless they pull the same stunt next time, too. In which case, we may start hearing talk about setting up competing organizations to do the job the current entities appear to have given up on.

January 3, 2011

Healthy skepticism about study results

Filed under: Bureaucracy, Media, Science — Tags: , , , , — Nicholas @ 13:30

John Allen Paulos provides some useful mental tools to use when presented with unlikely published findings from various studies:

Ioannidis examined the evidence in 45 well-publicized health studies from major journals appearing between 1990 and 2003. His conclusion: the results of more than one third of these studies were flatly contradicted or significantly weakened by later work.

The same general idea is discussed in “The Truth Wears Off,” an article by Jonah Lehrer that appeared last month in the New Yorker magazine. Lehrer termed the phenomenon the “decline effect,” by which he meant the tendency for replication of scientific results to fail — that is, for the evidence supporting scientific results to seemingly weaken over time, disappear altogether, or even suggest opposite conclusions.

[. . .]

One reason for some of the instances of the decline effect is provided by regression to the mean, the tendency for an extreme value of a random quantity dependent on many variables to be followed by a value closer to the average or mean.

[. . .]

This phenomenon leads to nonsense when people attribute the regression to the mean as the result of something real, rather than to the natural behavior of any randomly varying quantity.

[. . .]

In some instances, another factor contributing to the decline effect is sample size. It’s become common knowledge that polls that survey large groups of people have a smaller margin of error than those that canvass a small number. Not just a poll, but any experiment or measurement that examines a large number of test subjects will have a smaller margin of error than one having fewer subjects.

Not surprisingly, results of experiments and studies with small samples often appear in the literature, and these results frequently suggest that the observed effects are quite large — at one end or the other of the large margin of error. When researchers attempt to demonstrate the effect on a larger sample of subjects, the margin of error is smaller and so the effect size seems to shrink or decline.

[. . .]

Publication bias is, no doubt, also part of the reason for the decline effect. That is to say that seemingly significant experimental results will be published much more readily than those that suggest no experimental effect or only a small one. People, including journal editors, naturally prefer papers announcing or at least suggesting a dramatic breakthrough to those saying, in effect, “Ehh, nothing much here.”

The availability error, the tendency to be unduly influenced by results that, for one reason or another, are more psychologically available to us, is another factor. Results that are especially striking or counterintuitive or consistent with experimenters’ pet theories also more likely will result in publication.

December 31, 2010

Hidden agendas come to light in “Little Ethiopia” debate

Filed under: Bureaucracy, Cancon, Politics — Tags: , , , — Nicholas @ 11:11

An article at the Globe and Mail pushes the idea of designating part of Danforth Avenue in Toronto as “Little Ethiopia”. The comments were far more interesting than the original article, especially some rather inflammatory comments from “Gus66” (some of these comments have already been removed by the G&M moderators):

Canadian Centralist: “People don’t want to live in a foreign community. That is why immigrants what to live with people from their own race, that is why they want “little” communities from home. If home was so great, why did they leave in the first place?”

Gus66: “C.C. Go back to Pickering and live in your nanas basement…..!”

[. . .]

sore throat: “The statement was made that there would be no tax implications.

“We heard that before, in another ethnic situtation, and when the dust settled it was proven to indeed require tax dollars.

“Just saying blanket statments such as you made will come back to bite your butt. And you can keep your modern multicultural and pluralistic society — give me a totally integrated societly with no enclaves for any ethnic group anytime.”

Canadian Centralist: “Special interest groups always require taxpayer funds.”

Gus66: “Deepest throat I saw your name on Kyle Rae’s contribution list…When it’s rainbow flags it’s okay but when people want to spend their own money we call them freeloaders. Which gay couple are you?”

[. . .]

Nick Barlas: “Since the time DECA [Danforth East Community Association] started our neighbourhood has become bullied. No class, no honesty from your residents who only care about ramming their interests down everybody’s throats. I loathe the days people like you migrated back into the cities. You came back into the “ethnic” neighbourhoods and now you are bossing immigrants around? You guys are shameless and deserve to be sued. I hope your names get published and you are expressing your views as DECA because you deserve to be sued.”

[. . .]

Gus66: “landed immigrant in East York, home of the European people who’ve been living there and owning the area. All of sudden we have a bunch of snot faced yoyos telling us what to do?

“First of all, go pay your mortgage. Not a member = no rights, so shut your pie hole!

“Second, get off your little ponies… You own squat on another street and have no business telling businesses what to do with their money or how to manage their affairs. That is up to the businesses.

“Why don’t you stroll down the street with your nuncycles to some other hoods and try to pull this stunt on those BIAs? Hate mongerers. Because you think you’re smarter than the landlords and businesses in the area? Whose respect do you command? Own nothing, sitting on your well-fed behinds. You’re talking about tax payer respect with Rob Ford, newsflash geniuses, business people support Rob Ford, snot nosed DECA geeks do not and are a bunch of flaky NDPers and NOTHING MORE.

“You’re worse than maggots and parasite…sucking up someone else’s blood for yourselves. Bunch of cheap bimbos who pretend they care but really a bunch of spineless buffoons.”

[. . .]

Gus66: “Who are you weasels? I suggest you send a registered mail of yourselves to that BIA. I have four buildings just on that street and I will not put up with your antics. I have buildings all over the city, paid off, yes my grease haired g-parents came to this country like these immigrants do every day to make a living. Got a problem with that? No landmass belongs to anyone people. We all have rights, stuff it.

“Greeks started off in the back of the kitchen. Now the Sri Lankans who were in the back are buying stores. Are you going to go to their stores and tell them you don’t want them to have a chance before they started?

“TRY DEMOCRACY, not HARASSING stores. I’ve got dozens of stores all around the city and you people are the biggest goof balls. If you want your hood to improve, shove your winy twats over and let the real business people make decisions for themselves.

“I’ll rent all my stores to these people. They pay their rent, they’re clean and they RESPECT. One way or another, all your kind does is look for freebies and drink beer at your houses….”

December 29, 2010

Recycling: it’s not economics, it’s control

Filed under: Bureaucracy, Economics, Environment, Government, Politics — Tags: , , — Nicholas @ 00:03

Gregg Easterbrook points out the stupidities of many municipal recycling programs:

Freeze! Drop That Discarded Dishwasher or I’ll Shoot! The New York Times recently reported that unwanted appliances — old washing machines and so on — placed on the curb for disposal in New York City have been “disappearing.” With scrap metal prices strong, what the article calls “thieves” have been driving along streets scheduled for used-appliance pickups — in New York City, this happens by published schedule — and taking away the unwanted junk before the city’s officially approved recycler arrives. The “thieves” then sell the unwanted junk as scrap metal.

Set aside whether it’s theft to take an unwanted item that has been discarded in a public place. New York City bureaucrats think so; they’ve instructed police to ticket anyone engaged in recycling without government sanction. Twenty years ago, New York City bureaucrats were demanding that citizens recycle whether they wished to or not, and imposing fines for failure to comply. Now if the average person is caught recycling, it’s a police matter.

This issue is not the cleanliness of streets or the environmental benefits of recycling — it’s control of money. The New York City Sanitation Department pays a company called Sims Municipal Recycling about $65 million annually to pick up and recycle metal, glass and aluminum. Notice what’s happening here? Recycling is supposed to make economic sense. If it did, then the recycling company would be paying the city. Instead the city is paying the company. Montgomery County, Maryland, my home county, imposed recycling rules saying they made economic sense. Now the county charges homeowners $210 annually as a recycling tax. If recycling made economic sense, government would pay homeowners for the privilege of picking up their valuable materials. Instead New York City, Montgomery County and many other government bodies charge citizens for something they claim makes economic sense.

Recycling of aluminum makes good economic sense, given the energy cost of aluminum and the high quality of recycled aluminum. Depending on where you are in the country, recycling of newspapers may make sense. Recycling of steel and copper usually makes sense. But recycling of glass, most plastics and coated paper is a net waste of energy. Often the goal of government-imposed recycling program is to use lack of understanding of economics to reach into citizens’ pockets and forcibly extract money that bureaucrats can control.

Notice what else is happening here — New York City pays a company millions of dollars to do something “thieves” will do for free. The “thieves” harm no one, and could save New York City taxpayers considerable money. But then bureaucrats wouldn’t be in control. And surely no-show jobs and kickbacks have nothing, absolutely nothing, to do with New York City sanitation contracts.

December 24, 2010

Hey Kids! Did you get your paperwork in on time?

Filed under: Bureaucracy, Humour — Tags: , — Nicholas @ 00:01

If you hurry, you can just get your Santa’s Visit Application in before the deadline tonight!

December 22, 2010

In Soviet America, bank robs you!

Filed under: Bureaucracy, Economics, Law, USA — Tags: , — Nicholas @ 12:19

All joking aside, how is this allowed to happen?

The NYT reports on a growing phenomenon of wrongful foreclosure by US banks on homeowners who are caught up on their mortgage payments — and on homeowners who have no mortgage at all. In some cases, homeowners return from vacation to discover their locks changed and their every earthly possession sent to the dump (one woman lost her dead husband’s ashes when her bank burgled her ski chalet). Prominent in the list of banksters who rob innocent people of their homes and all their belongings? Those upright guardians of morality at Bank of America, who have decided that their customers can’t choose to contribute to Wikileaks’s defense fund.

H/T for the headline to commenter “Doramia“.

December 21, 2010

Reason TV: Detroit’s Train to Nowhere

Filed under: Bureaucracy, Politics, Railways, USA — Tags: , , — Nicholas @ 12:56

Do not attempt to change planes in Bombay

Filed under: Bureaucracy, India — Tags: , — Nicholas @ 12:45

India is a rising economic power in the world, but it still has lots and lots of problems. Sean had to change planes in Bombay. It wasn’t a pleasant experience:

It wasn’t just one person who’d fucked up. This was no single, lone fuck-up cascading through the nooks and crannies of a complex system, like a butterfly causes a hurricane; everybody who touched my life that day, apart from, thankfully, the pilot and the airframe maintenance crew and my rickshaw driver, was busy fucking up in one way or another, sometimes spectacularly so. The guy who had all that time to anticipate the Diwali crush and thousands of rebookings fucked up. The guy who’d arranged the airport signs fucked up. So did the guy who cleaned the floors. The women representing Air India and India Air were a pair of fucknuts; the baggage handlers were probably already pretty fucked up before they even got to work, which of course fucked things up even worse. And the guy who designed the airport had, at some point well in the past, fucked up pretty royally. Even my taxi driver was a complete fuckup. The president of Air India? That guy’s totally fucked in the head. What was most remarkable about it, though, is that despite things being so thoroughly fucked, I did eventually get where I was going. With my western eye, all I could see was disaster, chaos, and impossibility; what I couldn’t see, until a good samaritan made it clear, is that there was in fact a solution. I’d been told that this is a common thing in India, that life there can be a series of 11th-hour miracles.

And all this, at the freakin’ airport. If there was going to be more of the same in India, I’d better get used to it — and learn to navigate it better — before I tried to ride my scooter from one end of the country to the other.

H/T to Damian Penny for the link.

December 14, 2010

QotD: Buzzword Bingo, resumé edition

Filed under: Bureaucracy, Humour, Quotations — Tags: , , — Nicholas @ 12:30

Are you a motivated multitasker with extensive experience that has helped you become a results oriented team player?

Does your online resume say you have a dynamic and innovative skill set which has led to a proven track record of being entrepreneurial in a fast paced world?

Then congratulations, you’ve successfully used all 10 of the most overused buzzwords on LinkedIn in just two sentences.

[. . .]

And just so you know we tried, we did manage to get all 10 buzzwords into one single colossally cringe-worthy sentence sure to make any human resources manager’s skin crawl.

Heaven help the poor guy who has this phrase on his LinkedIn profile:

“Hi, I’m a motivated multitakser with extensive experience as an entrepreneurial and results oriented team player whose innovative and dynamic skills have helped me become adept at working in a fast paced world with a proven track record.”

Ta-da!

Matt Hartley, “The 10 most overused employment buzzwords on LinkedIn”, Financial Post, 2010-12-14

December 10, 2010

The Economist: “America … should learn from its mistakes in the past decade and stick to its own rules”

Filed under: Bureaucracy, Law, USA — Tags: , , , , , — Nicholas @ 08:23

A very good column in The Economist seems to cover the issues quite well:

BIG crimes deserve tough responses. In any country the theft and publication of 250,000 secret government documents would deserve punishment. If the leak costs lives, let alone the careers and trust that have already perished amid the WikiLeaks disclosures, the case for action is even stronger.

[. . .]

For the American government, prosecution, not persecution, offers the best chance of limiting the damage and deterring future thefts. The blustering calls for the assassination of Julian Assange, the WikiLeaks founder now in custody in London awaiting extradition to Sweden on faintly mysterious charges of sexual assault, look both weak and repellent. If Mr Assange has broken American law, it is there that he should stand trial, just like Bradley Manning, the alleged source of the stolen documents. If not, it may be some consolation that the cables so far reveal a largely flattering picture of America’s diplomats: conscientious, cool-headed, well-informed, perceptive and on occasion eloquent.

[. . .]

If America sticks to those standards now it will display a strength and sanity that contrasts with the shrill absolutism and cyber-vandalism of the WikiLeaks partisans. Calling Mr Assange a terrorist, for example, is deeply counterproductive. His cyber-troops do not fly planes into buildings, throw acid at schoolgirls or murder apostates. Indeed, the few genuine similarities between WikiLeaks and the Taliban — its elusiveness and its wide base of support — argue against ill-judged attacks that merely broaden that support. After a week of clumsy American-inspired attempts to shut WikiLeaks down, it is now hosted on more than 700 servers around the world.

The big danger is that America is provoked into bending or breaking its own rules, straining alliances, eroding credibility and — because it will not be able to muzzle WikiLeaks — ultimately seeming impotent. In recent years America has promoted the internet as a menace to foreign censorship. That sounds tinny now. So did its joy of hosting next year’s World Press Freedom Day this week. Chinese and Russian glee at American discomfort are a sure sign of such missteps.

H/T to John Perry Barlow for the link.

Update: This certainly matches what I expected Julian Assange’s personality to be like:

Defectors include Daniel Domscheit-Berg, otherwise known as Daniel Schmitt, who made a high-profile exit from WikiLeaks in September, and Herbert Snorrason, an Icelandic student. Both resigned in September. Snorrason is quoted as telling Assange, in an online chat log acquired by WiReD:

And you’re not even fulfilling your role as a leader right now. A leader communicates and cultivates trust in himself. You are doing the exact opposite. You behave like some kind of emperor or slave trader.

Snorrason’s departure was fomented by this declaration from Assange:

I am the heart and soul of this organization, its founder, philosopher, spokesperson, original coder, organizer, financier and all the rest. If you have a problem with me, piss off.

And he did.

December 9, 2010

Bruce Schneier on the WikiLeaks situation

Filed under: Bureaucracy, Media, USA — Tags: , , , , — Nicholas @ 07:48

Bruce Schneier has some useful observations about the ongoing WikiLeaks document release:

4. This has little to do with WikiLeaks. WikiLeaks is just a website. The real story is that “least trusted person” who decided to violate his security clearance and make these cables public. In the 1970s he would have mailed them to a newspaper. Today he uses WikiLeaks. Tomorrow he will have his choice of a dozen similar websites. If WikiLeaks didn’t exist, he could have put them up on BitTorrent.

5. I think the government is learning what the music and movie industries were forced to learn years ago: it’s easy to copy and distribute digital files. That’s what’s different between the 1970s and today. Amassing and releasing that many documents was hard in the paper and photocopier era; it’s trivial in the Internet era. And just as the music and movie industries are going to have to change their business models for the Internet era, governments are going to have to change their secrecy models. I don’t know what those new models will be, but they will be different.

QotD: Ontario’s “restrictive, puritanical, liquor laws”

Filed under: Bureaucracy, Cancon, Law, Liberty, Quotations, Wine — Tags: , , , , , — Nicholas @ 00:20

Later in the trip we were at a Napa Valley winery. During our winery tour, the guide mentioned that if we filled out an order form we could have a case of wine delivered to home or office. Then she stopped, looked at my friend and me, and said, “Oh wait, not to Ontario. You guys are worse than Utah.” She proceeded to list all the countries they ship to, two of which have majority Muslim populations. But Ontario was too much trouble, so they gave up trying. We could buy the wine and bring it over the border ourselves, but if it were to be shipped across the border it would clearly be illegal.

Our restrictive, puritanical, liquor laws are not just limited to restricting products or preventing private stores from selling alcohol. On our trip it became a running joke to point out things that were banned in Ontario. Happy hour is illegal in Ontario. I pointed to a seasonal winter beer in at a convenience store with a cartoon picture of Santa Claus on the label and noted it would be banned in Ontario. There is cheap beer across the U.S. because of intense competition, but Ontario has a price floor of $1.07 per bottle.

So I pose the question that I was asked in the bar in San Francisco. Why are we so puritanical when it comes to alcohol?

Hugh MacIntyre, “Ontario’s liberalism dies at the brewery door”, National Post, 2010-12-08

December 8, 2010

Worried about your upcoming citizenship test? Publius has the answers for you

Filed under: Bureaucracy, Cancon, History, Humour, Railways — Tags: , , , — Nicholas @ 08:48

Publius has done all the hard work for you so you can ace the new citizenship test:

So from the mouth of well meaning ignorance, how would a typical Canadian fare on Mr Kenney’s new immigration test? Thanks to the vast resources of this blog, and its network of agents and correspondents through out the Dominion, we have located the typical Canadian. He’s a male in his late thirties and lives in Kenora. Which I think is in Alberta. But from Toronto it’s hard to tell. We brought the typical Canadian to our high-tech testing center at the corner of Center St and Universe Ave, in downtown Toronto. Here is the test. And here is the typical Canadian’s answers:

– Identify four (4) rights that Canadians enjoy.

The right to complain about the weather. The right to complain about how taxes are too high. The right to complain that the government isn’t spending enough money on me or my community. The right to stand in the middle of the cookie aisle at Loblaws and block everybody’s way (I know who you are).

-Name four (4) fundamental freedoms that Canadians enjoy.

The freedom to speak, unless it offends a politically influential minority group. The freedom to own property, unless it offends a politically influential environmental group. The freedom to protest, unless it offends visiting dignitaries. The freedom to bitch about the weather, unless it offends a co-worker who is a ski-nut.

[. . .]

-What did the Canadian Pacific Railway symbolize?

That graft, corruption, political manipulation, juvenile anti-Americanism, and screwing over people who don’t live in Ontario and Quebec, has been a Canadian tradition since the beginning.

-What does Confederation mean?

Like federation but with more “con” in it. Like transfer payments.

[. . .]

-What is the role of the courts in Canada?

To uphold the laws of Canada, unless it conflicts with their personal political beliefs. At that point they just make stuff up, and then use some latin terms to cover their tracks.

-In Canada, are you allowed to question the police about their service or conduct?

Yes, but not during the APEC conference, the G20, or if you’re living in Caledonia.

December 7, 2010

Chinese official acknowledged that official data is unreliable

Filed under: Bureaucracy, China, Economics, Railways — Tags: , , , , — Nicholas @ 07:32

I’ve been saying this for years now: China’s official GDP and associated economic numbers are just not reliable:

A senior Chinese official said in 2007 that much of the country’s local economic data are unreliable, according to a leaked diplomatic cable published by the WikiLeaks website.

The official, Li Keqiang, was at the time Communist Party secretary of the northeastern province of Liaoning, and has since been promoted to vice premier. Since landing that position, he has overseen many of the central government’s efforts to improve the quality of its economic statistics, which continue to face many questions over their accuracy and consistency.

[. . .]

China’s Foreign Ministry has said it will not comment on the content of the diplomatic cables published by WikiLeaks. The leaked cable reports comments Mr. Li made in a dinner in Beijing with then-U.S. Ambassador Clark Randt on March 12, 2007. His remarks focused on the challenges of administering the province of Liaoning, which because of its legacy of failed state-owned enterprises was burdened with a large number of unemployed workers.

“When evaluating Liaoning’s economy, he focuses on three figures: 1) electricity consumption, which was up 10% in Liaoning last year; 2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and 3) amount of loans disbursed, which also tends to be accurate given the interest fees charged,” the cable says.

“By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are ‘for reference only,’ he said smiling,” the cable reads. “GDP figures are ‘man-made’ and therefore unreliable,” the cable paraphrases Mr. Li as saying.

As I said back in February, the reason for the made up numbers is inherent in the Chinese system:

In this way, the PLA stopped being just the customer/end user. They cut out the middleman and absorbed the entire supply chain. The PLA became a significant economic player in the Chinese industrial economy . . . and this is still true today. The generals aren’t formally in charge, but they own the companies that do military production.

So what? So let’s look at how a civilian corporation’s incentives differ from one owned directly by the army. In a civilian corporation, the CEO runs the business with an eye to generating the largest profit possible while staying (for the most part) within the law. A CEO who deviates from this to ride a favourite hobby horse will eventually face the wrath of the stockholders who want that maximized profit. There are natural limits on how much freedom to invest in uneconomic activity any CEO will be given. Sensible stockholders don’t try to micromanage the firm, but do raise questions if too much of the company’s efforts are devoted to things clearly not related to the company’s long term benefit. Company accounts can be rigged, for a time, to show misleading results, but eventually (Enron, Worldcom, etc.) the truth will out.

A Chinese firm that’s owned by the army? Profit may be nice, but the “CEO” reports to a different master: the guys with the guns. The company accounts will show exactly what the guys with the guns want them to show . . . and the oversight and auditing committee members carry submachine guns. You’re told that your target is 10% growth? Don’t you think that the reported result will be at least 10%? Because your life may depend on the reported results being acceptable.

As my former virtual landlord says, this is one of my hobbyhorses:

« Newer PostsOlder Posts »

Powered by WordPress