Quotulatiousness

June 1, 2012

“Only the enemies of the Euro and of the European political project … dream of such a cataclysm”

Filed under: Britain, Economics, Europe — Tags: , , , — Nicholas @ 13:22

To be a True European, you must believe in the European project wholeheartedly and unreservedly. Any other attitude is unacceptable:

I was once interviewed by one of Le Soir’s best-known journalists, who asked me whether I was in favor of the European project. I said that I would answer if she would tell me what it was. She did not, and we moved on to other subjects. Whatever the European project may be, those who don’t embrace it wholeheartedly — with a fervor that can only be described as mystical, considering that no one can explain or define it in simple terms — are depicted not as skeptics, but as enemies. Thus in Le Soir, we read: “Only the enemies of the Euro and of the European political project, notably the City of London, dream of such a cataclysm [the break-up of the single currency]!”

The City of London — Britain’s equivalent of Wall Street — here plays the role of the bloated plutocrat of Soviet iconography or of the Jewish manipulator of Nazi iconography, pulling the strings behind the scenes in order to achieve its malevolent design of controlling the world. One can make many possible criticisms of the City of London, but a determination to destroy the viability of the euro for some unspecified, atavistic reason is certainly not among them. If the euro is viable, the City couldn’t destroy it; if it is not, the City cannot save it. Besides, the idea that there is a congregation of malign conspirators within the fabled Square Mile who would rejoice at the euro’s implosion is absurd; the prospect is almost universally viewed with apprehension, though it would not come as a surprise to everyone.

QotD: Debunking the notion that today’s students face “unprecedented” challenges

Filed under: Economics, Education, History, Liberty, Quotations — Tags: , , — Nicholas @ 00:08

Far from being penalized, this generation may be the most privileged ever. Every generation lives through challenges. Our grandparents or great-grandparents lived in a society of gross social inequality and endured a world war that consumed 35 million lives. Their children came of age in the Great Depression, followed by six years of war in which another 60 million died. Their own children, the Baby Boomers, were without question a pampered generation, yet even they lived through long stretches of high unemployment and deep economic uncertainty. The oil shock of the 1970s ushered in a decade of stagflation — high inflation accompanied by stagnant growth and high unemployment — that made decent jobs no easier to nail down than they are today. The 20 years since the end of the 1980s has been a cycle of boom and bust that has seen millions of people lose homes, careers and life savings they spent decades building, often watching them vanish overnight through circumstances far beyond their control.

The notion that there was a time when anyone could coast through high school and land a nice secure career with minimal effort is sheer fantasy. Yes, a university degree carried more weight, because there were fewer of them, but that same scarcity limited the advantage to a relatively small group. The majority scratched out positions in competition with one another just as they do today. There was never, in my recollection, a bull market in sociologists, psych specialists or arts majors. A BA didn’t help you sell anything, build anything or invent anything. Entrepreneurs and self-starters never needed a university degree, and they don’t now.

[. . .]

If the 1960s and 1970s was a golden age of easy work and high pay, I missed it. If people skipped from school directly into secure jobs, happy families and a home of their own, it’s news to me. The challenges faced by youth are daunting, but no more daunting than they ever were. If Montreal’s graduates have been deprived of anything, it would appear to be lessons in history. Because they seem to have no clue how much tougher they’d have had it in almost any earlier generation they would care to choose.

Kelly McParland, “Quebec students are big on delusion, short on history”, National Post, 2012-05-31

This is why I always cheer for whoever is bidding against Toronto to host the Olympics

Filed under: Britain, Economics, Sports — Tags: , , , , — Nicholas @ 00:02

If publicly funded professional sports stadiums are bad for the local economy (and they almost always are), “winning” the bid to host the Olympic Games is far worse:

The history of the modern Olympics (and of other large-scale sporting events) reveals a consistent pattern. Organizers or local politicians in the host city commission “impact studies,” which almost always promise extravagant economic benefits. Studies performed after the event, however, find no positive effect at all — let alone one approaching the initial estimates. So it isn’t surprising that a PriceWaterhouseCoopers study commissioned by the British government forecasts that the Games would add about $9.4 billion to London’s GDP between 2005 and 2016. That seems like a large number until you realize that the London metro area’s GDP is roughly $712 billion annually. If the Games’ benefits were spread evenly throughout the decade, they would increase London’s GDP level by 0.1 percent each year.

Further, that $9.4 billion benefit pales compared with the cost of hosting the Olympics. In 2002, the UK’s Department for Culture, Media and Sport estimated that the cost would be $2.8 billion. Ten years later, London’s budget for hosting the Games is $15 billion. Costs already run above that figure and are likely to rise to approximately $38 billion, according to an investigation by the TV network Sky Sports. That would easily dwarf the economic benefits that the PriceWaterhouseCoopers study predicts. Security alone will be extremely costly: more British troops will patrol London than there are currently at war in Afghanistan. And these figures don’t count many hidden and indirect costs of hosting the Olympics — most prominently, disruption to business and traffic congestion. Traffic in London is already difficult; with special lanes for Olympics-related traffic, daily commutes will become a nightmare. (London’s transportation commissioner, Peter Hendy, helpfully advises commuters to go to the pub to avoid rush hour.)

Update, 5 June: The good news just keeps on coming for the London Olympics:

The boom to the economy that the Government hoped the Games would bring to the capital appears to become a bust with tens of thousands to tourists spurning the hiked prices, congestion and heightened security.

While bookings for July and August are down by 35 per cent on last year other European capitals appear to be prospering from London’s gloom.

French ministers, who lost the Olympic bid to Britain, might be quietly rubbing their hands with glee not only for dodging the £10 billion Games bill but also with a 50 per cent rise in tourism bookings. Similarly Barcelona and Berlin have seen their tourist numbers soar by 100 per cent over the summer.

This is an example of why, when the announcement was made that Paris had lost out on the bid for the 2012 Olympics to London, Reason titled their coverage “Lucky Paris“.

May 31, 2012

QotD: A plague on both your houses!

Filed under: Economics, Government, Politics, Quotations, USA — Tags: , , , , — Nicholas @ 00:02

Protestations from the Obama side that this is all just proof that recession/depression was so much worse than any of us knew that it’s a goddamn great and good thing that Obama is helming the ship of state because if it had been one of those idiot Republicans like George W. Bush we wouldn’t have had bailouts and a stimulus that was too small to really effect the economy — even smaller than the $150 billion tax thingamajig that Bush tried in early 2008 that was really pathetic because we now know that even Obama’s $800 billion attempt was obviously too small christ it should have been two or three or even four times bigger and for god’s sake can’t we just prepare for the alien invasion that Paul Krugman — he won a Nobel Prize so just shut up already! — says will create enough of a multiplier effect to finally restart the economy and screw the debt because we’ll have thousands of years to pay that down, especially now that thank Zardoz we’ve got universal health care that will be awesome if the d-bags on the SCOTUS don’t FUBAR it and Dodd-Frank means there won’t be any fraud or dumb lending!

And of course the Republicans will counter with: See, none of this would have happened if we’d only followed George W. Bush’s disastrous big-government spending ways and expansion of major entitlements and a defense buildup because sharia law is taking over whole hamlets in Oklahoma and our plan to increase annual spending over the next decade by just $1 trillion is so much better than the Prez’s to spend $2 trillion more, especially after increasing federal outlays by 60 percent or more over the previous decade when we controlled things is exactly the tonic the economy needs right now! But seriously folks, what do you expect when you let gay marriage happen? No economy can recover from that!

Nick Gillespie, “Is the Obama Recovery Over? Or Has it Not Really Started Yet?”, Hit and Run, 2012-05-30

May 30, 2012

The end of the “predictable” China

Filed under: China, Economics, Military, Politics, USA — Tags: , , , , , — Nicholas @ 10:03

Robert D. Kaplan on the end of an era in geopolitical calculations:

The United States has had it easy over the past third of a century in regards to China. Washington has been able to proclaim moral superiority over the Communist Party dictatorship in Beijing, even as those very dictators provided Washington with a stable, businesslike relationship that fostered immense opportunities for American companies in China and for the American economy overall. China’s rulers, ever since Deng Xiaoping consolidated power in 1978, may have been nominally communists, but they have also been professionals and technocrats who have ruled in a self-effacing, collegial style. Yes, they may oppress dissidents, but they have also been enlightened autocrats by the standards of the suffocating rulers who have governed in the Middle East.

But the purging of the pseudo populist boss of the megacity of Chongqing, Bo Xilai, may indicate that a less predictable period in Chinese politics lies ahead. Bo was something not seen in China since Mao Zedong: a leader with real charisma. Bo may indicate that the age of the technocrats will give way to the age of politicians — and politicians, even in liberal democracies, exploit people’s emotions. That could lead to more erratic, nationalistic rulers.

[. . .]

China’s autocrats have for many years been nervously riding a domestic tiger. With communism no longer a philosophical organizing principle for the state, they have had to justify their rule by delivering double-digit annual economic growth — or close to that — to provide jobs for a potentially restive younger generation. Thus, even while China has amassed impressive new air and sea power, it has — by and large — not tried to employ that power in a particularly hostile way. China’s communist rulers have had too much domestically to worry about without creating new problems for themselves by constantly challenging the United States or its allies on the high seas. While China’s push to acquire air-sea power most specifically dates to 1996, when Beijing was humiliated by Washington’s ability to drive two aircraft carrier strike groups through waters near the Taiwan Strait, the building of a substantial air force and navy have so far been part of the natural, organic process of a new and rising great power. At least so far, it has not been particularly destabilizing to the world or regional order, unlike Iran’s push to develop a nuclear capability as part of a drive for Near Eastern leadership. China’s rulers may be dictatorial, but they are not radical and messianic.

Boomers versus Millennials

Filed under: Economics, Education, Politics — Tags: , , , — Nicholas @ 09:09

Barbara Kay on an insight into the generational conflict triggered after a waiter dumps a glass of water into her lap:

We were dining at a good bistro. The waiter — early 20s — accidentally knocked a glass of water onto my lap. Suppressing annoyance, I was summoning a gracious smile to acknowledge his forthcoming apology when instead he chirped, “It’s okay, stuff happens.” Stung, I responded, “You’re unclear on the concept. You’re supposed to say ‘I’m sorry,’ and I’m supposed to say ‘It’s okay, stuff happens.’ ”

Our narrowed eyes locked: the Senior and the Millennial (a.k.a Gen Y or Echo Boomers). I was thinking: Your teflon complacency comes from a lifetime of helicopter parents and teachers ensuring you were failure-proofed to protect your precious self-esteem. He was probably thinking: Why aren’t you dead yet so I can get a decent job and afford the meal I’m serving you.

He would have a point.

We’re witnessing an unprecedented generational social tussle. In 1950, people my age were doddering retirees. Today, we’re healthier longer, enjoying still-productive lives. By clinging to our jobs, or starting new ones, we’re blocking the natural economic pipeline. Yet we’re also hanging on to our untenably expensive government benefits, because politicians genuflect before our massive voting numbers, not to mention our tendency to vote in higher proportions than the already far less numerous 18-34s.

But I have a point too. Cossetted, self-satisfied millennials lack humility and competitive drive. They think real life will echo their easy ride through high school and the artificially inflated grades they got for their dumbed-down university courses. An October 2011 National Report Card on Youth Financial Literacy polled 3,000 recent high school grads on their expectations. More than 70% erroneously assumed they’d own their own home in 10 years. The average respondent over-estimated his future earnings by 300%.

May 29, 2012

The fuzzy good intentions of equalization and the bad results

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 10:07

Peter Holle in the National Post, outlining the economic distortions of federal equalization payments in the recipient provinces:

Equalization, viewed critically, does no favours to either the funding or recipient provinces. After 50 years, outside transfers constitute an ever larger portion of the economies in have-not provinces. In an otherwise globally-oriented, market-driven world, Canada’s equalization program has encouraged the development of locally-oriented, public-sector driven economies.

Here are just a few ways that equalization provides incentives to harmful policy, stunting economic growth in the jurisdictions the policy means to help.

  • Inflating the public sector: Equalization has allowed recipient jurisdictions to create disproportionately larger public sectors because someone else is paying the bill. Manitoba’s public sector, for instance, employs 103 people per 1,000 residents, compared to a Canadian average of 84.
  • Politicizing spending. The external funding from equalization has allowed local politicians to build up vote-buying infrastructure with little political cost, by disconnecting taxation from benefit. Quebec’s $7-a-day daycare, and university tuition at less than half the Canadian average, would be unworkable without $7.4-billion in annual equalization subsidies from the rest of Canada.
  • Incentives for higher taxes. A path-breaking study by the Atlantic Institute for Market Studies showed that equalization rewards recipient provinces for imposing high and damaging tax rates, which deter private-sector investment and job creation. Manitoba, the only have-not province in Western Canada, has the highest income taxes in the region, and also has the lowest rate of private-sector investment.
  • Artificially inexpensive hydro power. By excluding the true value of renewable hydro energy revenues from the calculation of revenue capacity, the equalization formula rewards Manitoba and Quebec for charging artificially low domestic electricity prices. Below-market prices, in turn, encourage consumers to use more resources that otherwise would be conserved in response to accurate price signals.

May 26, 2012

Reason.tv interviews Robert Zubrin

Filed under: Economics, Environment, Liberty — Tags: , , , , , — Nicholas @ 10:01

“We have never been in danger of running out of resources,” says Dr. Robert Zubrin, “but we have encountered considerable dangers from people who say we are running out of resources and who say that human activities need to be constrained.”

In his latest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanism, Zubrin documents the history of dystopian environmentalism, from economic impairment inflicted by current global warming policies to the Malthusian concern over population growth. “Just think how much poorer we would be today if the world would have had half as many people in the 19th century as it actually did. You can get rid of Thomas Edison or Louis Pasteur, take your pick.”

Zubrin sat down with Reason Magazine Editor Matt Welch to discuss his book, the difference between practical and ideological environmentalism, and how U.S. foreign aid policy encourages population control.

The cost of getting to space

Filed under: Economics, Space, Technology, USA — Tags: , , — Nicholas @ 09:47

According to a tweet passed along by Tim Harford, the Dragon flight is a huge bargain:

RT @dcurtis: SpaceX’s entire history, incl. rocket design, testing, and launch operations, has cost less than Facebook paid for Instagram.

Andrew Coyne on Harper’s real “hidden agenda”

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 09:32

We’ve been hearing about Stephen Harper’s “hidden agenda” for nearly a decade and it’s about time for some of it to finally come to light — what’s the point of having a hidden agenda if you never actually implement any of it? Andrew Coyne thinks he’s detected the real thing:

It is becoming more difficult to accuse this government of having a hidden agenda. Not because it hasn’t tried, mind you. But while it remains as obtuse as ever about its intentions, the signs of an agenda are by now unmistakable. Where before it had attitudes, or at best stances, it is beginning to sprout what look remarkably like policies.

To be sure, they are modest, even piecemeal. They are often poorly communicated, where the Conservatives deign to communicate them at all. More often they are simply dropped on the unsuspecting public without consultation, or jammed through Parliament with little debate or scrutiny, quite apart from monstrosities like the omnibus bill.

But put them together and they have all the markings of an agenda:

  • Reform of Old Age Security, not only raising the age of eligibility by two years (starting in 2023, and phased in over six years) but offering higher benefits to those willing to keep working past the standard retirement age.
  • Free trade agreements, now being negotiated with virtually everything that moves: Europe, India, Japan, the Trans-Pacific Partnership, the ASEAN group.
  • Reform of immigration policy, across every category: skilled immigrants, refugees, investors, entrepreneurs, with an emphasis on recruiting immigrants with demonstrable economic prospects.
  • Reform of employment insurance, announced this week, to give repeat users, in particular, fewer excuses to refuse available work.
  • Moreover, the government is at last beginning to implement the Red Wilson report on productivity, four years after it was delivered, with recent reforms opening the door to foreign takeovers in the telecommunications sector (for companies with less than 10% of the market), and raising the threshold asset value for automatic review of foreign takeovers to $1-billion.

May 25, 2012

Herbert Hoover, far from a poster boy for laissez faire government

Filed under: Economics, History, USA — Tags: , , , , , — Nicholas @ 11:58

Steven Horwitz in The Freeman debunks the “high school history” notion that President Hoover was a proponent of laissez faire capitalism which caused the Great Depression. They’ve got the right culprit, but the wrong crime:

One of the most pernicious myths in the economic history of the twentieth century is the belief that the Great Depression was caused, or at least worsened, by Herbert Hoover’s dogmatic commitment to a “do nothing” laissez-faire policy in the aftermath of the stock market crash. This argument is part and parcel of the set of beliefs about the Great Depression that I have dubbed the “high school history” version of that event. (It includes the claims that laissez faire caused it, Hoover’s inaction worsened it, the New Deal did wonders, and World War II got us all the way out.) This claim about Hoover’s dedication to laissez faire is, as I have suggested, utterly false.

In fact Herbert Hoover was long known as a Progressive who favored much more government intervention in the economy. From his days with the U.S. Food Administration in World War I through his time in the 1920s as secretary of commerce, Hoover constantly pushed his beliefs that laissez faire did not work and that government must take a more active role. When the economy went south during his first year as president, it came as no surprise that he put those beliefs into action.

Hoover not only signed the Smoot-Hawley Tariff, as everyone knows, he also encouraged businessmen to keep wages up, expanded the real amount of government spending, reduced immigration to near zero, set up all manner of government lending facilities, and increased the budget deficit. Along with the Federal Reserve System’s failure to do its job, resulting in a 30 percent drop in the money supply, these Hoover interventions were responsible for turning what might have been a severe, but short recession into a Great Depression. So the “high school history” story is right to blame Hoover — but it does so for exactly the wrong reasons.

But it’s been a great way to tarnish free market advocates and effortlessly refute their arguments, because “everybody knows” that laissez faire doesn’t work. Our high school teachers wouldn’t have mislead us all about that, would they?

May 24, 2012

A Greek exit is an existential threat to the Euro

Filed under: Economics, Europe, Greece — Tags: , , — Nicholas @ 09:55

John Kay explains why it’s not just a simple cut-and-run for Greece or the rest of the Euro:

When countries joined the single currency, a relatively simple piece of domestic legislation converted contracts in drachmas, pesetas, markkas and Deutschmarks into contracts in euros at a prescribed exchange rate. But you cannot simply reverse that process when countries leave the single currency. You have to prescribe which contracts are now to be fulfilled in drachmas and which remain in euros or converted into Deutschmarks. That determination is politically fraught, technically complex and subject to long legal challenges.

About two years ago some large businesses and wealthy individuals began seriously to ask, “if the euros were to unwind, in which currency would my asset or contract be denominated?” The issue is not whether the euro coins in your pocket carry an Athenian owl or German imperial eagle. The issue is the status of bank deposits and loans, residential mortgages and commercial contracts, as well as wages and prices. The drain of funds from Greek banks is an indication that ordinary people are now thinking in these terms.

Europe’s hapless politicians, having asserted that exit from the single currency was impossible, must now claim that exit would be relatively easy. Only then can they plausibly threaten the Greek electorate with expulsion if they vote the wrong way. But exit was never impossible, never easy and even when it was publicly unthinkable central banks would have been negligent not to have put in place contingency plans.

That is why even though Greece is a small part of the eurozone, a Greek exit is an existential threat to it. Once a path to exit has been defined, business and individuals will have a template for understanding the consequences of further unwinding.

May 23, 2012

British government energy policies are “befuddled and beset by lobbyists”

Filed under: Britain, Economics, Government — Tags: , , , , — Nicholas @ 08:50

Simon Jenkins in the Guardian:

Anyone who claims to understand energy policy is either mad or subsidised. Last week I wrote that politics is seldom rational. It is more often based on intuition and tribal prejudice. This week we have a thundering example: the government’s new policy on nuclear energy.

Do not read on if you want a conclusion on this subject. For years I have read papers, books, surveys and news stories, and am little wiser. I trust to science and am ready to believe there is some great mathematician, some Fermat’s last theorem, who can write an equation showing where energy policy should turn. I have never met him.

The equation would start with the current market price of coal, gas, oil, nuclear and so-called “renewables”. That would give simple primacy to coal and gas. The equation would then factor in such variables as security of supply, which — being imponderable — can be argued from commercial interest and prejudice. Then it would have to take account of global warming and the virtue of lower carbon emissions. At this point the demons enter.

We must consider CO2 reduction through substituting gas for coal, carbon capture, nuclear investment, biomass, wind, wave, solar and tidal generation. We must consider the application of fiscal policy to gas and petrol use, to energy efficiency and house insulation. Each has a quantity attached to it and each a fanatical lobby drooling for subsidies. As for achieving a remotely significant degree of global cooling, that requires world diplomacy — which has, as yet, proved wholly elusive.

Britain’s contribution to cooling can only be so infinitesimal as to be little more than gesture politics, yet it is a gesture that is massively expensive. Meeting the current EU renewables directive, largely from wind, would cost some £15bn a year, or £670 a household, and involve the spoliation of swaths of upland, countryside and coast. It is calculated to save a mere 0.2% of global emissions, with negligible impact on the Earth’s sea level.

May 22, 2012

Reason.tv: Is Austerity to Blame for Europe’s Economic Woes?

Filed under: Economics, Europe, Government, Media — Tags: , , , — Nicholas @ 11:50

May 20, 2012

This is why I don’t expect the Bush tax cut to be allowed to expire

Filed under: Economics, Government, USA — Tags: , , , , — Nicholas @ 08:42

Here it is in one easy-to-understand graph:

Brad Plumer explains:

What will the economy look like in 2013? A great deal depends on what Congress decides to do at the end of this year. Remember, the Bush tax cuts are expiring, the payroll tax holiday will sunset, and a bunch of new spending cuts under the debt-deal “sequester” are scheduled to kick in. Coming all at once, that’s a potentially big drag on growth.

[. . .]

To put this in perspective, the Federal Reserve expects the economy to grow at a roughly 2.9 percent pace in 2013. If Congress does nothing at the end of this year, much of that growth could be wiped out, and there’s a strong possibility that the United States could lurch back into recession. (Granted, a lot could depend on how the Fed reacts in this situation.)

On the flip side, as Ezra discussed in Thursday’s Wonkbook, letting all of the tax cuts expire and spending cuts kick in would also cut the U.S. deficit considerably: “Public debt falls from 75.8 percent in 2013 to 61.3 percent in 2022.”

H/T to Doug Mataconis for the link.

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