Quotulatiousness

October 10, 2024

Trump’s tariff proposals will rival Smoot-Hawley for self-inflicted economic woes

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

J.D. Tuccille explains why Trump’s economic plans are very much a curate’s egg of good and bad ideas, but the proposed tariff plans would more than compensate for any good positive effects from the rest of his proposals:

Willis C. Hawley (left) and Reed Smoot in April 1929, shortly before the Smoot–Hawley Tariff Act passed the House of Representatives.
Library of Congress photo via Wikipedia Commons.

Former president and current Republican presidential candidate Donald Trump wants to extend the tax cuts passed when he was in the White House, which are due to expire next year. That would not just be welcomed by the many Americans who would benefit, it could boost economic activity. But there’s a big problem: The protectionist tariffs favored by Trump would undo the good done by his tax cuts, reducing rather than increasing prosperity.

Tariffs Not Seen Since the Great Depression

“Former President Donald Trump’s proposals to impose a universal tariff of 20 percent and an additional tariff on Chinese imports of at least 60 percent would spike the average tariff rate on all imports to highs not seen since the Great Depression,” warns Erica York of the Tax Foundation.

Trump has actually been a little vague on the size of his universal tariff, first floating it at 10 percent while allowing “it may be more than that”, and then upping the ante to 20 percent. Either way, it’s a cost that ends up being largely paid by Americans in terms of higher retail prices and more expensive imported parts and materials for domestic manufacturing.

The Trump administration’s 2018 “tariffs resulted in higher prices for a wide variety of goods that U.S. consumers and businesses purchase,” the Tax Foundation’s Alex Durante and Alex Muresianu concluded.

Even when tariffs don’t directly affect the cost of imported goods purchased by consumers, they still drive up the prices of many things made in the U.S. The Cato Institute’s Pierre Lemieux points out that “a tariff on an input (say, steel) is paid by the American importer who will typically pass it down the supply chain to his customers and eventually to the consumers of the final good (say, a car)”. Instead of boosting domestic production, that can do harm, instead.

“For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs,” Federal Reserve Board economists found when they researched the 2018 tariffs.

That’s not to say Trump is alone in his protectionism. Last month, Bob Davis noted for Foreign Policy that “the Biden administration is the first since at least President John F. Kennedy’s time to fail to negotiate a major free trade deal, instead embracing tariffs” while Trump pursued both tariffs and trade deals.

The Road to Serfdom by F.A. Hayek

Filed under: Books, Economics, History — Tags: , — Nicholas @ 03:00

David Warren recommends one of the first economics books I ever read and I fully concur with his appreciation of Friedrich Hayek’s most famous work:

For those who have an interest in politics, who also wish to have some knowledge of this subject, I can recommend a book published in 1944. It is by Friedrich Hayek, and is dedicated “To the socialists of all parties”. The title is, The Road to Serfdom.

It is extraordinarily well-written, for an academic whose native language wasn’t English, in less than two hundred exhilarating pages. The book predicts, correctly, that while they will lose the War, German ideological notions that began to prevail before the War in e.g. Germany, Russia, Italy, and throughout the West, would continue to do so, in Britain and America. They were plausible and were thought to have been proved in wartime. In the coming peacetime, all the intellectuals would be on board.

Yet they were wrong, and had always been wrong. The professor, Hayek, shows why neither a little nor a lot of socialism will ever work; why it invariably makes everyone poorer, except for an ideological elite; and why it traps whole societies in the condition of serfdom. Oddly enough, almost no one wants to be a serf, but some wish to have power over serfs. Hence the popularity of socialism among the power-hungry.

Too, ambiguous and poorly understood political terms fool people. (My father explained this as the Triple-B principle: “Bullshit Baffles Brains”.)

The idle reader should still be captivated by this book, which hasn’t dated, even slightly. Re-reading it, as I have been doing since high school, I find the arguments irresistible and compelling. Other members of the “Austrian School” out of which Hayek sprang (it was originally a Catholic movement, incidentally) are also informative, but none are so articulate.

The “Chicago School”, of Milton Friedman et alia, was the nearest American equivalent. But that was based on numbers, more than upon the ironical ideas, which old Austro-Hungaria had the leisure to mull.

October 9, 2024

Dangling the old “high speed rail between Toronto and Montreal” proposal again

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

In what seems like an annual ritual, the attractive-to-many (but economically non-viable) idea of putting in a high speed rail line between Toronto and Montreal is getting another airing:

The closest active model to the proposed VIA “High Frequency Rail” proposal is the Brightline service in Florida.
“BrightLine – The Return of FEC passenger service” by BBT609 is licensed under CC BY 2.0

In 2021, the Government of Canada confirmed its plans to significantly upgrade VIA Rail’s passenger rail service between the Windsor and Quebec City corridor into a high-frequency rail service.

As the name suggests, this new high-frequency rail service would offer significantly higher frequencies and reduce travel times on the route linking Toronto, Ottawa, and Montreal by 25 per cent.

With dedicated passenger rail tracks separate from freight operations, which greatly contribute to current service delays, this new train service would more consistently operate at increased speeds of up to 177 km/h to 200 km/h, and reliability would improve to an on-time performance by over 95 per cent.

This is quite true … the existing rail network between Toronto, Montreal and Ottawa was designed and built to carry freight traffic first and passengers only as a secondary goal — in many cases to attract government subsidies for the construction of the lines. Passenger services are, at best, marginally profitable but generally passenger service is a dead loss for the railways and only maintained thanks to ongoing government subsidies, grants, and tax breaks.

Freight trains — the profitable part of the railway network — have gotten longer and heavier over time as technology has improved (and train crews have gotten smaller, reducing labour costs) and the signal systems are optimized for freight traffic: long, slow-moving trains that take a lot of time and energy to speed up and slow down. Passenger trains travel faster (well, theoretically anyway) and make frequent stops to pick up and drop off passengers … signalling systems (which are critical to safe operations) need to be designed to optimize the usage pattern of the majority of the trains which in practice means freight with some modifications in high-population areas to accommodate passenger traffic.

This high-frequency rail service would use VIA Rail’s new and growing fleet of modern Siemens Venture trains operating on the Windsor-Quebec City corridor.

But as it turns out, the federal government is also contemplating a new service that is even better than high-frequency rail — the potential for a high-speed rail service, which would be the first of its kind in Canada.

Currently, the federal government is engaged in the Request For Proposal (RFP) process for the project. In July 2023, it shortlisted three private consortiums to participate in the RFP’s detailed bidding process, attracting international interest from major investors and some of the world’s largest passenger rail service operators.

This includes the consortium named Cadence, entailing CDPQ Infrastructure, AtkinsRealis (formerly known as SNC-Lavalin), Systra Canada, Keolis Canada, SNCF Voyageurs, and national flag carrier Air Canada.

The inclusion of Air Canada in the consortium is … interesting … as one of the goals of an actual high speed system would be to drain off a proportion of the short-haul passenger traffic that currently goes by air. A cynic might wonder if Air Canada’s interest in the project is to help or hinder.

According to a report in Toronto Star last week, each of the three consortiums was directed to create two detailed proposals, including one concept with trains that travel under 200 km/h and another concept with trains that travel faster than 200 km/h.

High-speed rail is generally defined as a train service that operates at speeds of at least 200 km/h.

It was further stated in the report that the new service could result in travel times of only three hours between Toronto and Montreal, as opposed to the current travel times of over five hours on existing VIA Rail services.

For further comparison, the travel time between Toronto and Montreal on flight services such as Air Canada is about 1.5 hours, which does not include the time spent at airports, while the driving time over this distance of over 1,000 km is about 5.5 hours — similar to VIA Rail’s existing services.

The potential holds for VIA Rail’s new service to operate at speeds over 200 km/h along select segments of the corridor.

The required costs to implement 200km/h speeds will be in eliminating as many grade crossings as possible and reconstructing some tight curves to allow the higher speed trains … and, as mentioned earlier, retrofitting the signal system for the faster passenger trains. Even those measures, which don’t really produce a true “high speed” system will be very expensive.

October 6, 2024

The rise of coal as a fuel in England

Filed under: Britain, Economics, History — Tags: , , , , , — Nicholas @ 03:00

In the latest instalment of Age of Invention, Anton Howes considers the reasons for the rise of coal and refutes the frequently deployed “just so” story that it was driven by mass deforestation in England:

An image of coal pits in the Black Country from Griffiths’ Guide to the iron trade of Great Britain, 1873.
Image digitized by the Robarts Library of the University of Toronto via Wikimedia Commons.

It’s long bothered me as to why coal became so important in Britain. It had sat in the ground for millennia, often near the surface. Near Newcastle and Sunderland it was often even strewn out on the beaches.1 Yet coal had largely only been used for some very specific, small-scale uses. It was fired in layers with limestone to produce lime, largely used in mortar for stone and brick buildings. And it had long been popular among blacksmiths, heating iron or steel in a forge before shaping it into weapons or tools.2

Although a few places burned coal for heating homes, this was generally only done in places where the coal was an especially pure, hard, and rock-like anthracite, such as in southern Wales and in Lowlands Scotland. Anthracite coal could even be something of a luxury fuel. It was burned in the palaces of the Scottish kings.3 But otherwise, the sulphur in the more crumbly and more common coal, like that found near Newcastle, meant that the smoke reeked, reacting with the moisture of people’s eyes to form sulphurous acid, and so making them sting and burn. The very poorest of the poor might resort to it, but the smoke from sulphurous coal fires was heavy and lingering, its soot tarnishing clothes, furnishings, and even skin, whereas a wood fire could be lit in a central open hearth, its smoke simply rising through the rafters and finding its way out through the various crevices and openings of thatched and airy homes. Coal was generally the inferior fuel.

But despite this inferiority, over the course of the late sixteenth century much of the populated eastern coast of England, including the rapidly-expanding city of London, made the switch to burning the stinking, sulphurous, low-grade coal instead of wood.

By far the most common explanation you’ll hear for this dramatic shift, much of which took place over the course of just a few decades c.1570-1600, is that under the pressures of a growing population, with people requiring ever more fuel both for industry and to heat their homes, England saw dramatic deforestation. With firewood in ever shorter supply, its price rose so high as to make coal a more attractive alternative, which despite its problems was at least cheap. This deforestation story is trotted out constantly in books, on museum displays, in conversation, on social media, and often even by experts on coal and iron. I must see or hear it at least once a week, if not more. And there is a mountain of testimonies from contemporaries to back the story up. Again and again, people in the late sixteenth and the seventeenth centuries complained that the woods were disappearing, and that wood fuel prices were on the rise.

And yet the deforestation thesis simply does not work. In fact it makes no sense at all.

Not out of the Woods Yet

This should immediately be obvious from even just a purely theoretical perspective, because wood was almost never exploited for fuel as a one-off resource. It was not like coal or peat or oil, which once dug out of the ground and burned could only be replaced by finding more. It was not a matter of cutting swathes of forest down and burning every branch, stump and root, leaving the land barren and going off in search of more. Our sixteenth-century ancestors were not like Saruman, destroying Fangorn forest for fuel. Instead, acres of forest, and even just the shrubs and trees that made up the hedges separating fields, were carefully maintained to provide a steady yield. The roots of trees were left living and intact, with the wood extracted by cutting away the trunk at the stump, or even just the branches or twigs — a process known as coppicing, and for branches pollarding — so that new trunks or branches would be able to grow back. Although some trees might be left for longer to grow into longer and thicker wood fit for timber, the underwoods were more regularly cropped.4

Given forests were treated as a renewable resource, claiming that they were cut down to cause the price of firewood to rise is like claiming that if energy became more expensive today, then we’d use all the water behind a hydroelectric dam and then immediately fill in the reservoir with rubble. Or it’s like claiming that rising food prices would result in farmers harvesting a crop and then immediately concreting over their fields. What actually happens is the precise opposite: when the things people make become more valuable, they tend to expand production, not destroy it. High prices would have prompted the English to rely on forests more, not to cut them down.

When London’s medieval population peaked — first in the 1290s before a devastating famine, and again in the 1340s on the eve of the Black Death — prices of wood fuel began to rise out of all proportion to other goods. But London had plenty of nearby woodland — wood is extremely bulky compared to its value, so trees typically had to be grown as close as possible to the city, or else along the banks of the Thames running through it, or along the nearby coasts. With the rising price of fuel, however, the city did not even have to look much farther afield for its wood, and nearby coastal counties even continued to export firewood across the Channel to the Low Countries (present-day Belgium and the Netherlands) and to the northern coast of France.5 A few industries did try to shift to coal, with lime-makers and blacksmiths substituting it for wood more than before, and with brewers and dyers seemingly giving it a try. But the stinking smoke rapidly resulted in the brewers and dyers being banned from using it, and there was certainly no shift to coal being burnt in people’s homes.6


    1. Ruth Goodman, The Domestic Revolution (Michael O’Mara Books, 2020), p.91

    2. James A. Galloway, Derek Keene, and Margaret Murphy, “Fuelling the City: Production and Distribution of Firewood and Fuel in London’s Region, 1290-1400”, The Economic History Review 49, no. 3 (1996): pp.447–9

    3. J. U. Nef, The Rise of the British Coal Industry, Vol. 1 (London: George Routledge and Sons, 1932), p.107, pp.115-8

    4. Oliver Rackham, Ancient Woodland: Its History, Vegetation and Uses in England (Edward Arnold, 1980), pp.3-6 is the best and clearest summary I have seen.

    5. Galloway et al.

    6. John Hatcher, The History of the British Coal Industry: Volume 1: Before 1700: Towards the Age of Coal (Oxford University Press, 1993), p.25

October 5, 2024

David Friedman on falling birth rates

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

In the west, generally speaking, female employment and economic power has been rising and birth rates have been falling, except among religious minorities. David Friedman provides some explanations:

“Tetra Pak® – Housewife at the dairy counter in a Swedish shop” by Tetra Pak is licensed under CC BY-SA 2.0 .

One possible explanation is changes in norms and legal rules that make mate search more difficult. An example is a norm against dating fellow employees and a stronger norm against dating someone who has authority over you or you have some authority over.

For many people, their job is the only context in which they routinely interact with lots of other people, the best environment for mate search. The interaction often provides a way of evaluating someone for characteristics such as honesty and competence as well as compatibility, much harder to do in the context of dating, harder still in computer dating. It works better for people who not only are fellow employees but are actually working together, which often means one just above the other in the office hierarchy.

The same issue arises in the university context. Undergraduates are free to date each other — mate search is arguably one of the main functions of college. Junior faculty members, likely to be unmarried, are commonly not supposed to date students, even students not taking classes from them, certainly not students who are. I am not sure what current norms are for graduate student/undergraduate interaction, expect graduate student/faculty romance to be at least somewhat frowned upon, especially if the faculty member has some authority over the student which is likely if they are in the same field, the context in which they are most likely to get know each other.

Another cause for declining birth rates might be changing norms of courtship. I have not been part of that market for over forty years but I gather from what younger people say online that many men believe that making advances that do not turn out to be wanted is not only embarrassing but dangerous, that they risk being accused of harassment or some related offense. In the student context, many men believe that if a romantic partner changes her mind she can get him into a great deal of trouble by taking advantage of a college disciplinary process heavily biased against men. I do not know to what degree that belief is true but many men believe it is, which could be expected to discourage courtship.

Along related lines:

    Also, when I was working for a big time international consulting firm, they tried to come out with a formal rule that said that you were allowed to ask out a co-worker, but only one time. If they said no, you could never ask again. Apparently the Italians howled with laughter and insisted that if this rule was enforced in Italy, no one would ever have kids, as the typical Italian courtship approach involves like a dozen rejections before ultimately the woman finally gives in. (GoneAnon)

That cannot be the full explanation since Italian birth rates are down too. Since birth rates are down in all or almost all developed countries and many less developed ones, it is worth investigating how widespread the relevant norms are.

Housewife Becoming a Low Status Profession

For a very long time, the default system for producing and rearing children was a married couple, with the husband producing income and the wife in charge of running the household and rearing the children. Over recent decades, the woman’s role in that division of labor has become a low status activity, lower status than making a living in the marketplace, much lower than professional success.1 Being an unmarried adult woman used to be, in most contexts, low status, on the presumption that if she could have caught a man she would have. At present, in much of western society, that has reversed — being a married housewife is lower status than being an employed single woman.

    …arguments from the stay-at-home moms I know, who say people are constantly giving them grief about it, and who are often looking for some part-time make-work job they can take just so people will stop giving them grief about being a stay-at-home mother (Scott Alexander)

It is possible for a married woman to have both a job and children or for an unmarried woman to have children, but the former is more difficult than for a full time housewife, the latter much more difficult.


October 4, 2024

You know the jig is up for “renewables” when even Silicon Valley techbros turn against it

JoNova on the remarkably quick change of opinion among the big tech companies on the whole renewable energy question:

Google, Oracle, Microsoft were all raving fans of renewable energy, but all of them have given up trying to reach “net zero” with wind and solar power. In the rush to feed the baby AI gargoyle, instead of lining the streets with wind turbines and battery packs, they’re all suddenly buying, building and talking about nuclear power. For some reason, when running $100 billion dollar data centres, no one seems to want to use random electricity and turn them on and off when the wind stops. Probably because without electricity AI is a dumb rock.

In a sense, AI is a form of energy. The guy with the biggest gigawatts has a head start, and the guy with unreliable generators isn’t in the race.

It’s all turned on a dime. It was only in May that Microsoft was making the “biggest ever renewable energy agreement” in order to power AI and be carbon neutral. Ten minutes later and it’s resurrecting the old Three Mile Island nuclear plant. Lucky Americans don’t blow up their old power plants.

Oracle is building the world’s largest datacentre and wants to power it with three small modular reactors. Amazon Web Services has bought a data centre next to a nuclear plant, and is running job ads for a nuclear engineer. Recently, Alphabet CEO Sundar Pichai, spoke about small modular reactors. The chief of Open AI also happens to chair the boards of two nuclear start-ups.

October 2, 2024

Duelling reports on how Javier Milei’s Argentinian “shock therapy” is working

At Astral Codex Ten, Scott Alexander tries to find something approaching the truth between the pantingly enthusiastic libertarian reports and the angrily negative progressive reports:

How is Javier Milei, the new-ish libertarian president of Argentina doing?

According to right-wing sources, he’s doing amazing, inflation is vanquished, and Argentina is on the road to First World status.

According to left-wing sources, he’s devastating the country, inflation has ballooned, and Argentina is mired in unprecedented dire poverty.

I was confused enough to investigate further. Going through various topics in more depth:

1: Government Surplus

When Milei was elected, Argentina went from constant deficits to almost unprecedented government surplus, and has continued to run a surplus for the past six months.

This wasn’t fancy macroeconomic magic. Milei just cut government spending:

This source says he cut the size of government by about 30% overall. Unsurprisingly, this eliminated the Argentine deficit.

[…]

6: Overall

When Javier Milei took office, he promised to do shock therapy that would short-term plunge Argentina into a recession, but long-term end its economic woes.

He has fulfilled his campaign promise to plunge Argentina into a recession. Whether this will long-term end its economic woes remains to be seen.

I think he gets credit for some purely political victories (completing the budget cuts he said he would complete), for decreasing inflation, and for improving the housing market. But in the end, history will judge him for whether his shock therapy eventually bears fruit. I don’t think that judgment can be made yet, and I don’t see many economists eager to go out on a limb and say that there are strong signs that his particular brand of shock therapy will definitely work/fail.

There are disappointingly few Milei prediction markets, probably because it’s hard to operationalize “he makes the economy good”. This multi-pronged mega-market has few traders, and weakly predicts a mix of good and bad things, maybe leaning a little good. But here is a more specific one:

… which compared to Argentina’s historical GDP growth rate seems — no, sorry, Argentina’s historical GDP growth rate is too weird to draw any conclusions.

And maybe the most important test:

September 29, 2024

Fleeced: Canadians Versus Their Banks by Andrew Spence

Filed under: Books, Business, Cancon, Economics — Tags: , , , — Nicholas @ 05:00

In the latest SHuSH newsletter, Ken Whyte talks about one of Sutherland House’s most recent publications:

I could write about eight versions of this post based on the many revelations in Andrew Spence’s Fleeced: Canadians Versus Their Banks, the latest edition of Sutherland Quarterly, released this week. I’m going to run with the version most relevant to my fellow publishers and small business people in Canada.

Andrew lays out in aggravating detail how Canadian banks, although chartered by the federal government to facilitate economic activity in the broader economy, do all they can to avoid lending to small and medium businesses, never mind that small and medium businesses employ two-thirds of our private-sector labour force and account for half of Canada’s gross domestic product.

By OECD standards, small businesses in Canada are starved of bank credit, and when they are able to secure a loan, they pay through the nose. The spread between interest rates on loans to small businesses and large businesses in Canada is a whopping 2.48 percent, compared to .42 percent in the US—more than five times higher.

Why? Because Canada’s banks are a tight little oligopoly, impervious to meaningful competition. Their cozy situation allows them to be exceedingly greedy. Their profits and returns to shareholders are wildly beyond those of banks in the US and UK (and, as Andrew demonstrates, their returns from their Canadian operations are far in excess of those from the US market, meaning they screw the home market hardest.)

Our banks never miss an opportunity to impose a new fee, or off-load risk. From their perspective, small business involves too much risk — some of them will inevitably fail. The banks prefer that publishers and dry-cleaners and restaurateurs either finance themselves by pledging their homes, or use their credit cards to cover fluctuations in cash flow or make investments that will help them hire, expand, and grow. And that’s what entrepreneurs do. According to a survey by the Canadian Federation of Independent Business, only one in five respondents accessed a bank loan or line of credit. Half of respondents financed themselves, tapped existing equity and personal lines of credit, and about 30 percent used their high-interest credit cards.

(The banks, incidentally, claim they need to keep credit card rates around 20 percent because their clients are high credit risks when their own data shows the risk is minimal. They simply prefer to gouge customers. To a banker, forcing hundreds of thousands of small businesses to use their credit cards to finance their businesses rather than giving them proper small business loans at reasonable rates is great business.)

By severely rationing credit and making it exceedingly expensive, Canada’s banks siphon off an ungodly share of entrepreneurial profit to themselves while leaving the entrepreneur with all the risk. Their insistence on putting their own profits above service to the Canadian economy is one of the main reasons Canada has such a slow-growing, unproductive economy and a stagnant standard of living.

There is much else in this slim volume to make your blood boil: exorbitant fees on chequing and savings accounts; mutual fund expenses that torpedo investments; ridiculous mortgage restrictions, infuriating customer service …

The “Foundations” essay could apply equally to Canada’s doldrums as it does to Britain

Earlier this week, I linked to the “Foundations” essay by Ben Southwood, Samuel Hughes, and Sam Bowman and it struck me that so much of what they discuss about Britain’s stagnation applied at least as well to Canada. In the National Post, John Ivison concurs:

The “Foundations” essay pointed to moribund GDP per capita growth, among other data points, to make the argument that Britain is standing still economically. (Britain’s economy grew 0.7 per cent a year between 2002 and 2022, Canada’s increased 0.6 per cent a year in the same period, while U.S. output swelled 1.16 per cent a year.)

In relative terms, both countries are getting poorer: in 2002, Canada’s GDP per person was 81 per cent of the U.S.; in 2022, it was 72 per cent. The same figures for the U.K. against the U.S. are 78 per cent in 2002 and, 70 per cent in 2022.

The reason for Britain’s stagnation, the authors argue, is that it has effectively banned investment in transportation, energy and housing — “the foundations it needs to grow.”

Sound familiar?

“The most important economic fact about modern Britain is that it is difficult to build almost anything, anywhere. This prevents investment, increases energy costs and makes it harder for productive economic clusters to expand,” the authors write, saying the result is lower productivity, incomes and tax revenues.

They argued that Britain needs a program of reform with the scale and ambition of the liberalization of the 1980s that focused on cutting taxes, curbing union power and privatizing state-run industries.

“This time we must focus on making it easier to invest in homes, labs, railways, roads, bridges, interconnectors and nuclear reactors,” they write.

That’s a difficult proposition for politicians who are able to resist anything except the temptation to use resources for immediate electoral gratification, rather than investing for a time after they have left office.

Both Canada and Britain are laggards when it comes to investment in infrastructure. While China spent more than five per cent of its GDP on roads, bridges and other infrastructure in 2021, Canada invested just 0.5 per cent (down from 1.3 per cent in 2010) and the U.K. 0.9 per cent.

But the lack of dynamism is not simply political expediency. Rather, it is motivated by an indifference, even a hostility, toward building critical infrastructure.

The Foundations report noted that Britain has not built a reservoir for 30 years, yet faces chronic water shortages in the east of England. Its environmental agency has blocked new development on the basis that it could only be supplied with water by draining environmentally valuable chalk streams. The result is that England’s innovation hub, Cambridge, is barred from expanding, which threatens to strangle the country’s life-sciences industry.

Similar impulses are at work in Canada. Federal Environment Minister Steven Guilbeault said in February that Ottawa would stop investing in new road infrastructure — a position he later clarified to say meant the federal government would not fund large projects like a highway tunnel connecting Quebec City and Levis, Que.

That same sentiment is reflected in the federal Liberal government’s Impact Assessment Act, passed in 2019, which slowed the pace and increased the cost of major project approvals.

On the housing front, a generation of activists emerged who were intent on preventing urban sprawl yet were also opposed to building mid-rise buildings of the kind that eased housing pressures in continental Europe. Constraints on approval are a major contributor to the 3.5-million-unit housing gap because supply has not kept pace with demand.

The consequence of Canada’s regulatory sclerosis is what business veteran Paul Deegan and former clerk of the Privy Council Kevin Lynch in an FP Comment article earlier this year referred to as “an insidious stealth tax on Canadian jobs and growth“.

Taking each of the “foundations” in turn, the depth of the problem becomes clearer — but so do the solutions.

September 24, 2024

British stagnation – “at some point it becomes impossible to grow when investment is banned”

Ed West reviews a new essay by Ben Southwood, Samuel Hughes, and Sam Bowman which tries to identify the underlying reasons for British economic stagnation:

The theme running through the essay is that the British system makes it very hard to invest and extremely expensive and legally difficult to build, making housing and energy costs prohibitive.

While we all know we have fallen in status, “most popular explanations for this are misguided. The Labour manifesto blamed slow British growth on a lack of “strategy” from the Government, by which it means not enough targeted investment winner picking, and too much inequality. Some economists say that the UK’s economic model of private capital ownership is flawed, and that limits on state capital expenditure are the fundamental problem. They also point to more state spending as the solution, but ignore that this investment would face the same barriers and high costs that existing infrastructure projects face, and that deters private investment.”

The problem is that “all of these explanations take the biggest obstacles to growth for granted: at some point it becomes impossible to grow when investment is banned”.

Even before the Russian invasion of Ukraine, the industrial price of energy had tripled in under 20 years. Per capita electricity generation in Britain is only two-thirds that of France, and a third of the US, making us closer to developing countries like Brazil and South Africa than other G7 states. Transport projects are absurdly expensive, mired by planning rules, and all of this helps explain why annual real wages for the median full-time worker are 6.9 per cent lower than in 2008.

In one of the most notorious examples, the authors note that “the planning documentation for the Lower Thames Crossing, a proposed tunnel under the Thames connecting Kent and Essex, runs to 360,000 pages, and the application process alone has cost £297 million. That is more than twice as much as it cost in Norway to actually build the longest road tunnel in the world.”

Britain’s political elites have failed, they argue, because they do not understand the problems, so “they tinker ineffectually, mesmerised by the uncomprehended disaster rising up before them”.

Even “before the pandemic, Americans were 34 percent richer than us in terms of GDP per capita adjusted for purchasing power, and 17 percent more productive per hour … The gap has only widened since then: productivity growth between 2019 and 2023 was 7.6 percent in the United States, and 1.5 percent in Britain … the French and Germans are 15 percent and 18 percent more productive than us respectively.” The gap continues to widen, and on current trends, Poland will be richer than the United Kingdom by the end of the decade.

Britain began to fall behind after the War, but after decades of relative stagnation, its GDP per capita had converged with the US, Germany and France in the 1980s, and our relative wealth peaked in the early Blair years. (Personally, I wonder if one reason for the great Oasis nostalgia is simply that we were rich back then.) If Britain had continued growing in line with its 1979-2008 trends, average income today would be £41,800 instead of £33,500 — a huge difference.

France is the most natural comparison point to Britain, a country “notoriously heavily regulated and dominated by labour unions”. This is sometimes comical to British sensibilities, so that “French workers have been known to strike by kidnapping their chief executives – a practice that the public there reportedly supports – and strikes are so common that French unions have designed special barbecues that fit in tram tracks so they can grill sausages while they march.” Only in France.

It is also heavily taxed, especially in the realm of employment, and yet despite this, French workers are significantly more productive. The reason is that France “does a good job building the things that Britain blocks: housing, infrastructure and energy supply”.

With a slightly smaller population, France has 37 million homes compared to our 30 million. “Those homes are newer, and are more concentrated in the places people want to live: its prosperous cities and holiday regions. The overall geographic extent of Paris’s metropolitan area roughly tripled between 1945 and today, whereas London’s has grown only a few percent.” One quality-of-life indicator is that “800,000 British families have second homes compared to 3.4 million French families“.

They also do transport far better, with 29 tram networks compared to seven in Britain, and six underground metro systems against our three. “Since 1980, France has opened 1,740 miles of high speed rail, compared to just 67 miles in Britain. France has nearly 12,000 kilometres of motorways versus around 4,000 kilometres here … In the last 25 years alone, the French built more miles of motorway than the entire UK motorway network. They are even allowed to drive around 10 miles per hour faster on them.”

September 21, 2024

Statistics Canada notes significant decline in life satisfaction and hope for the future

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

In one sense, we should be quite used to Statistics Canada giving us unwelcome economic news, given the state of the Canadian economy over the last decade. What seems less in character is that they’re connecting the dots between our obvious national financial decline and showing how directly it has impacted ordinary Canadians’ views about life in Canada and what they expect in the future:

Life satisfaction among Canadians is on the decline. Based on data from the Canadian Social Survey, levels of life satisfaction have been tracking downward since the summer of 2021, when quarterly monitoring of key Quality of Life indicators began. Less than half (48.6%) of Canadians aged 15 years and older were feeling highly satisfied with their lives in 2024, down from 54.0% three years earlier.

Not only is life satisfaction down, but so is hopefulness about the future, which dropped from 65.0% to 59.7% from 2021 to 2024. These results are based on a new study released today, “Charting change: How time-series data provides insights on Canadian well-being”, which sheds light on changes in overall life satisfaction, hopeful feelings about the future and financial well-being. It examines differences and trends across various dimensions, such as age, gender, racialized and non-racialized populations, and 2SLGBTQ+ populations.

Decline in life satisfaction more common among young adults and racialized Canadians

Life satisfaction can be considered a pulse check on Canadians’ overall well-being. While this indicator of subjective well-being has been declining for the past few years, there is nonetheless substantive variation in life satisfaction across different demographic groups. Younger adults (aged 25 to 34) had notable declines in their life satisfaction in 2024, with their proportions declining an average of 3.9 percentage points per year since 2021. By 2024, fewer than 4 in 10 (36.9%) of these adults were highly satisfied with their lives.

Meanwhile, seniors (aged 65 and older) maintained their high level of satisfaction, with 61.5% being happy with their lives in 2024. This measure of subjective well-being has remained relatively stable among senior Canadians since 2021.

In addition, racialized Canadians, who are younger on average than non-racialized Canadians, saw greater drops in life satisfaction than their non-racialized counterparts. The proportion of racialized Canadians reporting high levels of life satisfaction fell from 52.7% in 2021 to 40.6% in 2024. This decline was more than five times higher than the decrease observed for non-racialized Canadians, who experienced a decline in life satisfaction of 0.8 percentage points per year from 2021 to 2024. In 2024, over half (51.5%) of non-racialized Canadians were happy with their lives.

It really is a bad sign when the largest province in Confederation is also becoming the most disheartened by its economic prospects:

September 19, 2024

“This is the Law of Unintended Consequences in action”

Tom Knighton provides a wonderful example of “be careful what you wish for”, especially in the rich virtue-signal territory of the “green transformation”:

“Artisanal cobalt miners in the Democratic Republic of Congo” by The International Institute for Environment and Development is licensed under CC BY 2.5 .

… it seems our glorious green future now comes with more child labor!

    A new report from the Department of Labor raises tough questions about whether and to what extent forced labor and child labor are intertwined with climate-friendly technology.

    The department released a report this month finding that several minerals that are key components of electric vehicles and solar panels may be produced through these unethical labor practices.

    The findings point to major ethical quandaries surrounding the ongoing energy transition. Climate change, if not addressed, endangers many of the world’s most vulnerable people. At the same time, the report raises serious human rights concerns about the technology being used to address it.

[…]
Whoops.

Here’s the thing, cobalt and nickel are kind of important for this sort of thing, so we have to get them from somewhere and the one attempt to mine cobalt here in the United States fell flat. Why? The price of cobalt dropped. It was no longer profitable to try to mine it in the United States.

But in poor countries, it was still plenty viable.

Yet while we view child labor as unethical, we have to remember that our society is rich enough that we can afford to hold that belief. Now, I share it and I’d rather kids be kids, and worry about things like school, video games, television, and that sort of thing, but the truth is that when you’re barely able to feed yourself, you need every penny you can get.

That means kids going out to work.

That means doing some grueling, back-breaking, nasty work like mining stuff like cobalt.

It means paying for dirty, nasty strip mining so you can convince yourself and your friends that you’re better than those of us who still prefer a gasoline- or diesel-powered car.

All around us, we tend to be oblivious to the reality of the rest of the world. We simply think something should be so and then just act like they are. We ignore what all might be required to make that something so.

This is the Law of Unintended Consequences in action.

QotD: “Solutions” to climate change

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

Everyone who isn’t an idiot knows the climate change hoax was never about “science”. That’s a hack lie they use to shut you up when you point out that the ice age, floods, and mass polar bear die-offs they are always promising never, ever seem to happen. It’s a deliberate scam that blends leftism, hysterical hyperbole, and outright fraud into a gooey pudding designed to fill the spiritual void in empty-souled western suckers while providing a tool for our global leftist establishment to steal more of our money and freedom.

Quick: name a climate change remedy that does not result in you being less free and/or paying more money. It’s actually remarkable. Every single thing that we absolutely must do right now no time to wait how dare you pause to think how dare you is something leftists always wanted but could never talk people into doing until the threat of weather vengeance started lurking around the corner.

You can’t name any. There aren’t any, because the weird climate cult is not about weather but about separating you from your liberty and loot. And, apparently, your life if you won’t obey.

Kurt Schlicter, “TIME’s Commie Nag of the Year Can Go Pound Sand”, Townhall.com, 2019-12-15.

September 17, 2024

Unbearable anti-humanism

Filed under: Economics, Health — Tags: , , , — Nicholas @ 04:00

Tim Worstall responds to a recent dispatch-from-dystopia from Christopher Ketcham, decrying the “Unbearable Anthropocentrism” he sees in the world:

To true miserablists, this chart is pure bad news. How will we get to the revolution this way?

No idea who Ketcham is built then he doesn’t know who I am so we’re equal there. His complaint is that Our World in Data tends to show that the world is becoming a better place. Poverty is decreasing, infant mortality rates are falling, more folk have at least a square and ever increasing numbers are getting three and so on.

This is, as the cool kids say, problematic. Because if the thing to be opposed — capitalism and markets — is making the world a better place then where will we get the revolutionary fortitude to get rid of what is making the world a better place?

Something must be wrong here, right? Well, yes, it is:

    For obvious reasons, Roser’s cheerful view of capitalist business-as-usual – and the data that would seem to support it – has made him a darling of libertarian market fundamentalists, who have lavished praise on his work.

See, this is problematic. So, what?

    Given the support that Roser enjoys from billionaire oligarchs at the pinnacle of the capitalist system, one wonders if it is a coincidence that so much of the data he headlines for public consumption happens to valorize that system.

Oooooh, no, the claim isn’t that he’s writing lies. It’s just a question that is being asked. Could it, you know, I wonder if …

To which the correct answer is that Ketcham is a tosser. For it really is true that these last 40 years of global neoliberalism have coincided — at the very least coincided with — the greatest reduction in abject poverty in the entire history of our species.

But because capitalism, markets, the ghastly little tosser has to spread shade on someone reporting — honestly reporting — this truth. Hey, sure, we can have lots of lovely arguments about causation and so on. But reporting facts is wrong if they’re politically inconvenient? Someone will only report facts if they’re being paid — bribed — to do so?

Fuck off laddie, go die in a ditch.

Like, you know, far too many of us all did before this capitalism, markets, shit.

Fuck off.

September 15, 2024

QotD: “Primordial” Marxism

By “primordial Marxism” I mean Marx’s original theory of immiseration and class warfare. Marx believed, and taught, that increasing exploitation of the proletariat would immiserate it, building up a counterpressure of rage that would bring on socialist revolution in a process as automatic as a steam engine.

Inconveniently, the only place this ever actually happened was in a Communist country – Poland – in 1981. I’m not going to get into the complicated historiography of how the Soviet Revolution itself failed to fit the causal sequence Marx expected; consult any decent history. What’s interesting for our purposes is that capitalism accidentally solved the immiseration problem well before then, by abolishing Marx’s proletariat through rising standards of living – reverse immiseration.

The most forward-thinking Marxists had already figured out this was going to be a problem by around 1910. This began a century-long struggle to find a theoretical basis for socialism decoupled from Marxian class analysis.

Early on, Lenin developed the theory of the revolutionary vanguard. In this telling, the proletariat was incapable of spontaneously respond to immiseration with socialist revolution but needed to be led to it by a vanguard of intellectuals and men of action which would, naturally, take a leading role in crafting the post-revolutionary paradise.

Only a few years later came one of the most virulent discoveries in this quest – Fascism. It is not simplifying much to say that Communists invented Fascism as an escape from the failure of class-warfare theory, then had to both fight their malignant offspring to death and gaslight everyone else into thinking that the second word in “National Socialism” meant anything but what it said.

During its short lifetime, Fascism did exert quite a fascination on the emerging managerial-statist elite. Before WWII much of that elite viewed Mussolini and Hitler as super-managers who Got Things Done, models to be emulated rather than blood-soaked tyrants. But Fascism’s appeal did not long survive its defeat.

Marxists had more success through replacing the Marxian economic class hierarchy with other ontologies of power in which some new victim group could be substituted for the vanished proletariat and plugged into the same drama of immiseration leading to inevitable revolution.

Most importantly, each of these mutations offered the international managerial elite a privileged role as the vanguard of the new revolution – a way to justify its supremacy and its embrace of managerial state socialism. This is how we got the Great Inversion – Marxists in the middle and upper classes, anti-Marxists in the working class being dismissed as gammons and deplorables.

Leaving out some failed experiments, we can distinguish three major categories of substitution. One, “world systems theory”, is no longer of more than historical interest. In this story, the role of the proletariat is taken by oppressed Third-World nations being raped of resources by capitalist oppressors.

Though world systems theory still gets some worship in academia, it succumbed to the inconvenient fact that the areas of the Third World most penetrated by capitalist “exploitation” tended to be those where living standards rose the fastest. The few really serious hellholes left are places (like, e.g. the Congo) where capitalism has been thwarted or co-opted by local bandits. But in general, Frantz Fanon’s wretched of the Earth are now being bourgeoisified as fast as the old proletariat was during and after WWII.

The other two mutations of Marxian vanguard theory were much more successful. One replaced the Marxian class hierarchy with a racialized hierarchy of victim groups. The other simply replaced “the proletariat” with “the environment”.

Eric S. Raymond, “The Great Inversion”, Armed and Dangerous, 2019-12-23.

« Newer PostsOlder Posts »

Powered by WordPress