Quotulatiousness

February 24, 2012

“[T]hose who pass for our leaders are largely anti-democratic, elitist and have little compunction about intruding into our private lives”

Filed under: Economics, Liberty, Media, Politics — Tags: , , , , — Nicholas @ 10:21

Daniel Ben-Ami at spiked! recommends reading Robert H Frank’s The Darwin Economy: not because it’s well-written (he says it’s not) but because it exposes the mindset of our would-be tyrants.

Everyone interested in contemporary society should read Robert H Frank’s The Darwin Economy or a book like it. It is not that it is amazingly astute or beautifully written. It is neither. But it does give readers an exceedingly important perspective: an inside view of how the current generation of politician-technocrats thinks.

Identifying some of the key themes of contemporary political debate is easy enough. A glance at the media reveals that those who pass for our leaders are largely anti-democratic, elitist and have little compunction about intruding into our private lives. Working out how they reach the conclusions they do, understanding the internal logic or their approach, is more difficult.

In many ways, economics is the discipline best suited to the technocratic mindset. This has nothing to do with its traditional subject matter. It is not about debating how to produce goods and services or how to distribute them. Instead, it relates to how economics has emerged as an approach that distances itself from democratic politics and provides little room for human agency.

[. . .]

Finally, the narrow vision embodied in technocratic approaches leads to a blinkered approach to problem-solving. For example, most economists discuss tackling climate change in terms of the optimum design of a market for carbon trading. There is little critical debate about the nature of the threat the world is facing or of the range of possible solutions. One alternative to tinkering with the demand for carbon might be to have a huge programme for building nuclear reactors. Such an initiative would also have the advantage of helping to tackle a vital but often forgotten problem: the need for massive amounts of additional energy to fuel economic development.

The technocratic approach to policymaking has become immensely influential and pernicious. Although it is often expressed in terms of economic arguments, it has an impact across the whole range of social life. It is anti-democratic, anti-political and anti-human. To counter the rise of technocracy, it is necessary to delve deep into how its arch-exponents think.

February 21, 2012

First it was the “he-cession”: now it’s the “she-cession” in Ontario

Filed under: Bureaucracy, Cancon, Economics, Government — Tags: , , , , — Nicholas @ 11:47

Frances Woolley in the Globe & Mail Economy Lab says that the next phase of Ontario’s recovery from the 2008 recession will disproportionally fall on women:

Men were hit hard by the 2008-9 economic downturn, with losses of construction jobs (98 per cent male), transport jobs (90 per cent male), and manufacturing jobs (70 per cent male). Male unemployment rose so quickly that people began to talk about a “he-cession.”

Three years on, a tenuous “he-covery” seems to be under way – male unemployment rates fell last year, and the percentage of men with jobs rose.

Now it’s the ladies’ turn. Ontario’s Drummond Report calls for deep cuts to financial, administrative and secretarial jobs throughout the public service. Strictly speaking, the report recommends cutting costs; automating, streamlining and consolidating the delivery of services. Yet administrative costs equal administrative jobs — jobs that are, 8 times out of 10, held by women.

The bulk of Ontario government spending goes to MUSH — Municipalities, Universities, Schools and Hospitals. Overall spending cannot be reduced substantially without making cuts in these areas. There are about 280,000 teachers and professors in Ontario, and 65 per cent of them are female. The Drummond report recommends larger class sizes for elementary and secondary school teachers, and “flexible” teaching loads for university professors. Yet more students per teacher mean fewer teaching jobs. Just as a downturn in the construction sector leads to male unemployment, a downturn in the teaching sector leads to female unemployment.

Death on the railways

Filed under: Economics, Government, India, Railways — Tags: — Nicholas @ 11:37

I didn’t realize the extent of the problem in India, as reported in the Guardian:

About 15,000 people are killed each year while crossing the tracks on India’s mammoth railway network, according to a government safety panel that recommended more bridges and overpasses should be built as a matter of urgency.

Most of the deaths occur at unmanned railroad crossings, the panel said in a report. About 6,000 people die on Mumbai’s crowded suburban rail network alone, it said.

Another 1,000 people die when they fall from crowded coaches, when trains collide or coaches derail.

[. . .]

The committee blamed railway authorities for the “grim picture”, saying there were lax safety standards and poor management.

It said local managers were not given adequate power to make crucial decisions and that safety regulations were also breached because of severe manpower shortages.

It does seem odd that one of the world’s most populous countries — once known for chronic over-staffing of government and government-owned organizations — has “manpower shortages” in this critical area.

Greece: “now officially a ward of the international community”

Filed under: Economics, Europe, Government, Greece — Tags: , , , — Nicholas @ 10:40

Felix Salmon on the dire Greek financial future:

Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:

    We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece… The Eurogroup also welcomes the stronger on site-monitoring capacity by the Commission to work in close and continuous cooperation with the Greek government in order to assist the Troika in assessing the conformity of measures that will be taken by the Greek government, thereby ensuring the timely and full implementation of the programme. The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent.

The problem, of course, is that all the observers and “segregated accounts” in the world can’t turn Greece’s economy around when it’s burdened with an overvalued currency and has no ability to implement any kind of stimulus. Quite the opposite: in order to get this deal done, Greece had to find yet another €325 million in “structural expenditure reductions”, and promise a huge amount of front-loaded austerity to boot.

February 18, 2012

Rex Murphy: The Drummond report should have been released before the Ontario election

Filed under: Cancon, Economics, Government, Media — Tags: , , , , — Nicholas @ 11:48

In the National Post, Rex Murphy expresses his displeasure that the Drummond report was not available for discussion during the last Ontario election campaign:

With the exception of the writings of the prophets Jeremiah and Isaiah at their bleakest, flavoured with a touch of H.P. Lovecraft on the days when that lightless mind was wrestling with a migraine, the recent meditations of Don Drummond on Ontario’s fiscal situation set the standard for prose that vibrates with gloom and foreboding.

The prophet Drummond is aware of this. He tried to prepare Ontario for the grim messages he was sending. At the press conference announcing his 529-page diagnosis of Ontario’s fiscal morbidity, he produced a remarkable understatement about his report and the 320 recommendations of cuts, freezes and cancellations that so enliven its bristling pages. Said Mr. Drummond (perhaps hiding a bitter smile): “This will strike many as a profoundly gloomy message.” Those listening to Mr. Drummond recalled P.G. Wodehouse: “I could see that, if not actually disgruntled, he was far from being gruntled.”

The Drummond report is scathing, frightening, a grim portrait, an indictment of Ontario’s fiscal management during the last eight years of McGuinty government. It is everything columnists in this paper have said and more. The Drummond analysis offers what we may call a spectrograph of Ontario’s perilous financial situation. It is also a devastatingly chilly portrait of imminent decline, should the government of this once dynamic, productive and industrious province fail to follow the prescription — 320 deep, demanding and painful recommendations that Mr. Drummond so vigorously recommends.

[. . .]

Politicians worry about cynicism and apathy among the electorate. Bringing out this report after sending the voters to the polls will reinforce the cynicism and bake the apathy. And why not? I have no doubt that Tory leader Tim Hudak or the NDP’s Andrea Horwath would have found a way, or been only too obliging, to see the report after the election, as well.

There should be an election do-over. Of course there will not be. Because to call an election now, and contest one on the real state of the economy, would be an unparalleled action of real candour and public valour. It would be asking Ontarians to vote on the reality of their government, not the spin of the parties. What politician would dare set so dangerous a precedent as that?

Of course, given how badly Tim Hudak and the Progressive Conservatives fought the last election, they’d still manage to fumble, flail, and falter just enough to let Mr. McGuinty keep his job. One can only imagine that the gods (along with the rest of Canada) hate Ontario and want to see more suffering.

“Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.”

Filed under: Cancon, Economics, Government, Politics — Tags: , , , , — Nicholas @ 00:01

Terence Corcoran brings the gloom on the Ontario government’s most likely response to the Drummond report:

Ontario, get ready for The Big McGuinty. The 562-page report from the government-appointed Commission on the Reform of Ontario’s Public Services, chaired by economist Don Drummond, has all the makings of a diversionary shell game in which everybody is directed to follow the pea of spending cuts while the real game is something else.

With attention now focused on carving Mr. Drummond’s 362 recommended slices off the great Ontario spending bologna, the real bait-and-switch objective, The Big McGuinty of this giant exercise in fiscal self-flagellation, is something else altogether: tax increases.

Does anybody seriously think the Liberal government of the Rev. Dalton McGuinty, after a decade of installing feel-good spending increases and extravagant policy schemes, is suddenly going to roll it all back and reverse a decade of ideological commitment to government intervention and liberal spending programs?

The Drummond report would require policy-backtracking on a vast scale. Somewhere in the near-eternal labyrinth of the Drummond report there must be evidence that the McGuinty’s Liberal government did something right over the last decade. If there is, I haven’t found it yet.

February 17, 2012

America’s galloping regulation state

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , — Nicholas @ 09:55

You know you’re becoming a regulation-for-the-sake-of-regulation state when even The Economist — whose current staff have never met an EU regulation they didn’t love to pieces — can correctly poke fun at you for your obsessive over-regulation of everything:

Americans love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children’s lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.

But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.

[. . .]

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Gary Johnson is “the candidate that the Left once hoped Barack Obama would be”

Filed under: Economics, Liberty, Media, Politics, USA — Tags: , , — Nicholas @ 09:01

Theo Anderson thinks that Gary Johnson is the candidate that should terrify the Democrats:

Gary Johnson is, in some important ways, the candidate that the Left once hoped Barack Obama would be. He vocally opposes the death penalty, the use of torture by the U.S. military, and the indefinite detention of people charged with a crime–even suspects charged with terrorism.

He’s pro-choice. He calls for deep cuts in the defense budget and an immediate withdrawal of U.S. troops from Afghanistan and from many of our military bases around the world. He unequivocally supports marriage rights for gays and believes that legalizing marijuana — rather than building a wall — is the key to solving illegal immigration. He also favors a two-year grace period for immigrants who are in the U.S. illegally, so that they can obtain work visas and continue living and working here.

[. . .]

What’s striking about Johnson isn’t just the fact that he’s to the left of Obama and most other elected Democrats on many issues. It’s also his boldness in comparison with the Democrats’ timidity. He’s been a fierce critic, for example, of the warmongering and civil-liberties abuses by both major parties over the past decade. In January, when he spoke the ACLU’s National Staff Conference, he called for repeal of the Patriot Act.

“Ten years ago,” he said, “we learned that the fastest way to pass a bad law is to call it the ‘Patriot Act’ and force Congress to vote on it in the immediate wake of a horrible attack on the United States. The irony is that there is really very little about the Patriot Act that is patriotic. Instead, it has turned out to be yet another tool the government is using to erode privacy, individual freedom and the Constitution itself.”

February 16, 2012

Rum running in the Maritimes during Prohibition

Filed under: Cancon, Economics, France, History, USA — Tags: , , , — Nicholas @ 11:33

I just received a press release about a new documentary to be shown on the CBC this Sunday. Here’s the trailer:

Rum Running is a half hour documentary that will celebrate its world broadcast premiere on CBC Television’s Land & Sea on Sunday, February 19, 2012 at 12 Noon. Rum Running describes the history of rum running and depicts the high stakes role that Nova Scotia and the French Islands of St. Pierre and Miquelon played during the era. The film reveals how thousands of law abiding citizens of Atlantic Canada were lured into the alcohol smuggling trade during Prohibition in the 1920’s and 30s.

How long will it take for McGuinty to “lose” the Drummond report?

Filed under: Cancon, Economics, Government, Politics — Tags: , , — Nicholas @ 11:24

Yesterday, the Drummond report was released, containing literally hundreds of recommendations for getting Ontario’s government back on the fiscal straight-and-narrow. Perhaps half a dozen of the recommendations will be welcomed by Dalton McGuinty and his ministers. The rest will be anywhere from mildly unwelcome to outright anathema. In the National Post, Linda Nguyen has an overview:

The Ontario government needs to “swiftly and boldly” implement all of the hundreds of recommendations in a massive report released Wednesday if it wants to eliminate a projected $30.2 billion deficit by 2017, warns economist Don Drummond.

“Unfortunately, we’re dealing with a harsh reality in identity here,” said Mr. Drummond, author of the 543-page report and former chief economist with TD Bank.

The audit, which could be an example to other jurisdictions struggling to control spending, offered 362 recommendations in various sectors including health care, education, social programs, justice and labour relations.

[. . .]

In its 2011 budget, the Ontario government had projected its deficit to climb to $16-billion, but Mr. Drummond says his projects peg it at more than double that if the province continues its current spending.

To reach the target, Ontario must decrease its total program spending to 0.8% for the next seven years.

It’s been an item of faith among Liberals and NDPers that former Premier Mike Harris carpet-bombed the provincial economy during his two terms in office. As Scott Stinson points out, however, “Ontario’s projected spending needs a 17% cut. Mike Harris only cut 3.9%”:

“Avoid across-the-board cuts. Such a blunt tool treats equally a valuable efficiently run program and one that is outdated and sloppily managed. This is dumb.”
Dumb? Such plain speaking! We are used to government reports that prefer to say a measure “fails to properly realize efficiencies by ensuring its actions are in line with forward-looking goals and objectives.”

“This is not a smorgasbord from which the government can choose only the tastiest morsels and ignore the less palatable.”
Eat your brussels sprouts, Dalton McGuinty! But despite the pleasant analogy — who doesn’t enjoy a good buffet? — this is one of the more stark lines in the whole report. Implement it all, or it won’t work, the Commission says. Yikes.

“In budget planning, do not count chickens before they are hatched.”
We’ll say this for Mr. Drummond: he’s not afraid to use the folksy language.

“Kicking the can down the road is no solution.”
See?

“Do not hang onto public assets or public service delivery when better options exist. Consider privatizing assets and moving to the private delivery of services wherever feasible.”
Also, when preparing discussions with public-service unions, bring a helmet.

[. . .]

“The province should, in future discussions with the Ontario Teachers’ Federation, reject further employer rate increases to [pension plans] beyond the current rate.”
Another one sure to be a hit with the unions. Did you know that on average a teacher retires at 59, having worked 26 years, and collects a pension for 30 years? Me neither.

“The government should work to discuss, in particular, the overproduction of teachers with Ontario’s 13 universities offering teacher education programs.”
The term “overproduction” of teachers makes them sound kind of like widgets.

“Reshape student financial assistance, including the newly announced 30% Off Ontario Tuition grant, to target more of the assistance to low-income students.”
Say, remember that key plank of your election platform? Yeah, you need to totally rethink that.

The economics of the military-industrial complex

Filed under: Bureaucracy, Economics, Government, Military, Technology, USA, Weapons — Tags: , , , , , , — Nicholas @ 08:57

Eisenhower was right: the military-industrial complex has the US government tight within its grip, and there’s no easy fix. Strategy Page has a useful overview:

For decades the U.S. Armed Forces has been having problems with rapidly growing (much greater than inflation) costs of weapons. Congress passes laws to try and cope and the laws are ignored. One example is the laws calling for accurate life-cycle costs (for development, manufacturer, and maintenance of weapons over their entire service life). A recent study found out that, despite laws calling for accuracy and consistency in these numbers, most manufacturers manipulated the data to make their systems look less expensive than they actually were. The Department of Defense is increasingly taking extreme measures in the face of this corruption and cancelling more and more very expensive systems. But the manufacturers continue to use smoke and mirrors to get new projects started and failed ones funded.

New weapons get approved because of another form of procurement corruption, the Low Ball Bid. Last year the U.S. Air Force demanded that defense contractors stop low balling, which in practice means submitting unrealistically low bids for new weapons (to make it easier for Congress to get things started) and then coming back for more and more money as “unforeseen problems” appear and costs keep escalating and delivery is delayed. Currently, procurement projects are about a third over budget and most items are late as well. Procurement of weapons and major equipment make up about a third of the defense budget. While this is expected to decline over the next decade, as defense budgets shrink, the problem also extends to upgrades and refurbishment of existing equipment.

The most intractable problem is the decades old contractor practice of deliberately making an unreasonably low estimate of cost when proposing a design. The military goes along with this, in the interest of getting Congress to approve the money. Since Congress has a short memory the military does not take much heat for this never ending “low ball” planning process.

February 15, 2012

Italy faces the end of “a job for life”

Filed under: Economics, Europe, Italy, Law — Tags: , , — Nicholas @ 09:51

You could say that they’re not happy about the possibility:

It was just an off-the-cuff quip during a television interview this month. But when Prime Minister Mario Monti remarked that having a job for life in today’s economy was no longer feasible for young people — indeed, it was “monotonous” — he set off a barrage of protests, laying bare one of the sacrosanct tenets of Italian society that the euro zone crisis has placed at risk.

Reaction was fast, furious, bipartisan and intergenerational. “I think the prime minister has to be careful with the words he uses because people are a little angry,” Claudia Vori, a 31-year-old Rome native who has had 18 different jobs since graduating from high school in 1999, said of Mr. Monti’s “monotonous” moment.

[. . .]

In Italy in particular, every major political force after World War II subscribed to the idea of guaranteeing the work of the male breadwinner to preserve the traditional family structure, said Elisabetta Gualmini, a labor expert who teaches at the University of Bologna. This social doctrine was also blessed by the Roman Catholic Church, which still holds much sway in Italy.

“The problem is that this model is myopic” in a global marketplace, Professor Gualmini said. “But Italy has entrenched itself on this model, which became a strong ideology and so rooted in beliefs that it cannot be challenged.”

Stephen Gordon: The timing may be right for an austerity budget

Filed under: Cancon, Economics, Government, USA — Tags: , , — Nicholas @ 09:40

The federal government needs to rein in spending, and an “austerity” budget is intended to do that. Stephen Gordon points out that the US economy’s recent positive signs will increase the chances of budgetary success here in Canada:

For the first time in years, the economic news out of the U.S. is encouraging: a strong jobs report for January, a continuing fall in the number of initial claims for unemployment benefits, and even signs that its housing market may begin to revive in the near future. It may appear unseemly parochial to wonder what a U.S. recovery means for Canada, but that is the question that matters for Canadian policy making.

The recent recession should put to rest sayings such as “when the U.S. economy sneezes, the Canadian economy catches cold” to rest. The Canadian recession began almost a year after the U.S.’ did, was much less severe, and was over much more quickly. Nor was this an exceptional episode: the effect of a U.S. recession on Canada is much smaller than what is generally supposed.

The obverse side of this statement is that a strong U.S. recovery doesn’t guarantee strong economic growth in Canada. But it may be enough to offset the effects of an austerity program that will be much less austere than that implemented by the Chrétien Liberal government. In 1995, the federal structural deficit was on the order of four per cent of GDP, as opposed to 1 per cent now. Even if the Conservatives implement federal public-sector cuts similar in magnitude to those of the mid-1990s, transfers to provinces and individuals are to be spared.

Shit happens: the economics version (NSFW)

Filed under: Economics, Humour, Media — Tags: — Nicholas @ 00:04

H/T to Greg Mankiw for the link.

February 13, 2012

Ontario’s other alcohol sales monopoly

Filed under: Cancon, Economics, Law — Tags: , , , , — Nicholas @ 11:25

I guess it’s technically part of an oligopoly (?duopoly?), but along with the KGBO LCBO, the other entity that is legally allowed to sell beer is the mostly foreign-owned Beer Store:

… the experience highlights one of the many absurdities of a system where more than 80 per cent of beer sales are controlled by three multinationals — Labatt Brewing Co. Ltd. (owned by Anheuser-Busch InBev SA), Molson Coors Brewing Co. and Sleeman Breweries Ltd. (owned by Japan’s Sapporo Breweries Ltd.).

“The way the system is set up unfairly limits access to customers,” Mr. Beauchesne complained. “Molson, Labatt and Sleeman are completely in control of how beer stores look and feel, what products are promoted. They get to control the whole shopping experience and I get none of that control.”

The McGuinty government is pledging to review outdated liquor laws early in the legislative session that begins this week. MPP Grant Crack, parliamentary assistant to the Agriculture, Food and Rural Affairs Minister, said the Beer Store’s monopoly will no doubt come up.

[. . .]

After 85 years, the Beer Store is an anachronism.

It’s often hard to reconcile the ad world of beer — the snow-capped mountains, parties and hockey — with the utilitarian factory-like outlets where most Ontarians actually buy the stuff.

There are noisy conveyor belts, bottle crushers and cases of beer stacked on metal shelves in dank warehouses. In many stores, patrons still make their selection by picking from a row of dusty empties on a shelf.

Behind the counter, harried clerks juggle bottle returns and running the cash register.

Forget about tastings, attention-grabbing displays of new offerings or expert advice to help you choose from hundreds of selections. At the 437 Beer Stores, it’s get in line, pay the clerk, get out.

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