Quotulatiousness

August 12, 2011

Gunter: Government is the problem

Filed under: Economics, Government, Politics — Tags: , , — Nicholas @ 12:18

Not much to disagree with Lorne Gunter here, at least in the main outline:

What do Obamacare, the London riots and a possible French debt crisis have in common? They are all proof that Western governments have grown beyond all reasonable, sensible limits. All these examples, and many more, demonstrate that we have grown utterly dependent on a ubiquitous state. Without one, we are at a loss about what to do.

[. . .]

And I am not talking solely of lifelong welfare recipient or habitual EI claimants. I am talking about middle-class voters who screech at the mere suggestion that they pay a portion of their “free” health care, education or pensions. I’m referring to cause-pleaders who run to government commissions claiming infringement of their rights every time fate deals them a less-than-ideal hand. Even people who think there is a social good in bicycle paths or parks or waterfront boardwalks, and therefore a common obligation to fund them through tax dollars.

And I also mean executives who want the state to use its coercive power to limit competition or to tax money away from working people to fund massive business-stimulus programs. A CEO demanding a bailout to mitigate bad business decisions they’ve made is every bit as guilty of this as a welfare advocate who claims it is the state’s duty to provide everyone with cable television, high-speed Internet, sports for their kids and hobby supplies so no one feels isolated from mainstream society.

Governments can do some things (relatively) well — courts, policing, national defence — but the more they attempt to do, the less well they do any of the tasks they’ve taken on. Western governments have vastly extended the range of human activities they now attempt to control, regulate, or foster. As with any organization that tries to do too much, it increases the chance of failure over a larger area.

Why Obama is being attacked from the left

Filed under: Economics, Media, Politics, USA — Tags: , , , , , — Nicholas @ 12:12

Victor Davis Hanson outlines the reasons for increasing attacks on President Obama and his administration from his erstwhile allies on the left:

Politics, of course. The combination of sinking polls to the near 40% range, the stock market nosedive, the Standard and Poor’s downgrade, the tragedy in Afghanistan, the confusion over Libya, the embarrassing golf outings and First Family insensitive preferences for the aristocratic Martha’s Vineyard, Vail, and Costa del Sol have contributed to a general unease on the Left about Obama’s judgment, perhaps to the extent that he might well take the Left down in 2012, both in the House and Senate, whether he wins reelection or not.

But the argument remains incoherent: Obama is being blamed for not being liberal enough — after federalizing much of the health care delivery system, expanding government faster than at any time since 1933, borrowing more money in two and a half years than any president in history, absorbing companies, jawboning the wealthy, going after Boeing, reversing the order of the Chrysler creditors, adding vast new financial and environmental regulations, appointing progressives like a Van Jones or Cass Sunstein, and institutionalizing liberal protocols across the cabinet and bureaucracy, from the EPA to the Attorney General’s Office.

In other words, there is now an elite liberal effort to disentangle Obama from liberalism itself, and to suggest that his sagging polls are not a reflection of Obama’s breakneck efforts to take the country leftward — but either his inability or unwillingness to do so!

Partly, the disappointment is understandably emotional. Just three years ago Obama was acclaimed as a once-in-a-lifetime prophet of liberalism, whose own personal history, charisma, teleprompted eloquence and iconic identity might move a clearly center-right country hard leftward where it otherwise rarely wished to go.

Partly, the anger is quite savvy: if one suddenly blames Obama the man, rather than Obama the ideologue, then his unpopularity is his own, not liberalism’s. There is a clever effort to raise the dichotomy of the inept Carter and the politically savvy Clinton, but in the most improbable fashion: Clinton supposedly was a success not because he was personable, sometimes compromising, and often centrist, and Carter was a failure not because he was sanctimoniously and stubbornly ideological, but just the opposite: Clinton is now reinvented as the true liberal who succeeded because of his principled leftwing politics; Carter like Obama was a bumbling compromiser and waffler.

August 11, 2011

Canada’s debt crisis happened at a fortunate time

Filed under: Cancon, Economics, History — Tags: , , , — Nicholas @ 12:03

Father Raymond J. de Souza explains why Canada’s financial success story can’t be easily replicated by Europe or the United States:

The slaying of the deficit by Paul Martin saved Canada from the sovereign debt turmoil now afflicting Europe and America. While full credit is due to Mr. Martin, and it is gratifying to see other countries look to our experience, the turnaround in fiscal policy that Canada achieved in the 1990s is simply impossible to achieve in Europe or the United States in the near term. When we had our debt crisis, sparked by downgrades of the federal government’s credit rating between 1993 and 1995, we could make tough choices with the prospect of almost immediate results. No country has that option today.

That is only partly due to politics. Many have observed that the Liberal majority government of the day had the power to take dramatic action. That understates the case. Not only did the Grits have a majority, they had the near-certainty of another majority in 1997, given the disarray among the four opposition parties. The Chrétien government of 1995 was the most electorally secure government in Canadian history. No other country — not even Canada — has that circumstance today.

[. . .]

Europe and America face weak economic growth, rising debt service costs and no tax reforms to provide robust new streams of revenue. Even if granted the vast powers of the Chrétien government — not for nothing was it called the “friendly dictatorship” — neither Europe nor America have a path to slaying their deficits, aside from ever more brutal spending cuts. And indeed, if serious spending cuts add to unemployment and, in the short term, restrain economic growth, then the deficit may not shrink as welfare costs rise and revenues shrink.

Canada did well to respond to our crisis in the 1990s. We were lucky to have had it when we did.

August 8, 2011

“Canada has become the snotty kid at the front of the class that gets every answer right”

Filed under: Cancon, Economics, Government, USA — Tags: , — Nicholas @ 15:39

Kelly McParland reads the fine print:

Near the bottom of the Standard & Poor’s report that downgraded U.S. debt last week is a tribute to the Canadian economy that could contribute to what’s becoming a serious case of swollen-headedness.

In comparing the U.S. situation to “relevant peers”, i.e. other western economies, it notes that Canada has become the snotty kid at the front of the class that gets every answer right. Of five countries — Canada, the U.S., Germany, France and Britain — Canada has the lowest government debt burden (net debt to gross domestic product), at 34%.

It adds: “By 2015, we project that … net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%.”

And while the other four are all expected to see their debt declining, in the U.S. it could still be on the rise. So nya-nya to you, rest of western world.

August 7, 2011

Mitchell: Obama bears only 15% of the blame for the downgrade

Filed under: Economics, Government, History, USA — Tags: , , , , , , , — Nicholas @ 17:57

In a blog post guaranteed to tick off members of both parties, Daniel Mitchell tries a first approximation of where the blame should be assigned:

Well, it turns out that Social Security is a relatively minor part of the problem, so even though President Roosevelt’s policies exacerbated and extended the Great Depression, the program he created is only responsible for a small share of the fiscal crisis. To give the illusion of scientific exactitude, let’s assign FDR 13.2 percent of the blame.

The health care numbers are much harder to disentangle because it’s not apparent how much of the increase is due to Medicare, Medicaid, Bush’s prescription drug entitlement, and Obamacare. A healthcare policy wonk may know these numbers, but the CBO long-run forecast didn’t provide much detail.

So with a big caveat that these are just wild estimations, I feel reasonably comfortable in saying that both Bush and Obama made matters worse with their reckless entitlement expansions, but that they merely deepened a fiscal hole that was created when President Johnson imposed Medicare and Medicaid.

Trawling a virtual economy to support a non-viable “real” economy

Filed under: Asia, Economics, Gaming, Technology — Tags: , — Nicholas @ 14:47

Give North Korea some credit for finding a viable source of revenue:

What’s a dictator to do when his third-world economy is wheezing along on its last legs? Hack some video games, of course! According to a report in the New York Times, North Korea’s Kim Jong-il unleashed an army of young computer crackers on popular South Korean online gaming portals to find ways to make quick cash.

South Korean authorities claim that a squad of approximately 30 hackers operated from a base in China and were given the mission of breaching online gaming servers (including those of the immensely popular Lineage) to set up bot factories and automated farming collectives. The digital booty was then sold to gamers for a reported $6 million over two years.

Addressing traffic congestion (in any city)

Filed under: Economics, Technology, USA — Tags: , , — Nicholas @ 14:03

Everyone knows that gridlock leads to wasted time and increased stress, but the effects of degraded mobility are worse than most people realize. Traffic congestion deprives job-seekers of opportunities, robs businesses of customers, and hastens the exodus of residents from the central city to the suburbs.

And although mounting gridlock may seem like the unavoidable result of increased population and strained budgets, the experience of nations from France to Australia proves otherwise. Reason Foundation draws on what’s worked worldwide and recommends a three-part plan:

1. Expand roads with underground tunnels and elevated structures.
2. Use pricing to keep traffic flowing.
3. Pay for new projects with private-sector financing instead of taxes.

That plan can help Chicago or any other city bust congestion and boost economic growth.

August 6, 2011

Oh, good: I didn’t miss much while I was away

Filed under: Economics, Humour, Politics, USA — Tags: , , , — Nicholas @ 16:24


Obama: Debt Ceiling Deal A Prime Example Of Democrats And Democrats Sacrificing For The Greater Good

July 31, 2011

Another book to add to the “to be read” pile

Filed under: Books, Economics, History, Media — Tags: , — Nicholas @ 18:00

From the current issue of Reason, a review of a pair of new books on the concept of “empire”:

The Rule of Empires, by the Washington University historian Timothy Parsons, explores the fundamental contradictions of imperial rule, making the case that empires have become increasingly difficult to maintain as potential subjects’ identities have become less fluid and more nationalistic. In Merchant Kings: When Companies Ruled the World, 1600–1900, the independent historian Stephen Bown takes a less systematic approach to the study of imperial power, but his book supplements Parsons’ by filling in the biographical details of the men who built Europe’s modern commercial empires. Both books demonstrate that while empire may seem a quick route to power and wealth, in the long run the idea is a military and financial loser.

[. . .]

Empires throughout history have claimed “to rule for the good of their subjects,” Parsons maintains, but this “was and always will be a cynical and hypocritical canard. Empire has never been more than naked self-interest masquerading as virtue.” To keep resources flowing from subjects to rulers, empires must walk a tightrope between subjugation and assimilation. If the state imposes draconian laws and taxes, it will face rebellion, so the rulers must seek out collaborators among their subjects who will assist in the domination of their fellow citizens. In return, collaborators are frequently brought into the imperial fold and given a portion of the spoils. But this leaves the empire vulnerable to conquering from the inside out, with many masters and few servants.

[. . .]

Empire building typically falls under the purview of governments, but in the 17th through 19th centuries, European states outsourced imperial conquest to quasi-private joint-stock companies. Governments granted these companies monopoly trading rights in distant regions and frequently offered their military might to ward off potential rivals. States rarely intended for the companies to become independent imperial powers, but the potential spoils of conquest proved hard for company officials to resist. After all, they had been freed from the discipline of competition, they were thousands of miles from political oversight, and their military risks were socialized by their state sponsors. As Bown points out in Merchant Kings, the EIC and similar corporations “were less the product of free-market capitalism than the commercial extension of European national wars and struggles for cultural and economic supremacy. They occupied the muddy grey zone that exists between government and enterprise.”

I’ve been looking for a good (recent) history of the East India Company for the last several months, so Merchant Kings sounds like it’d be of interest.

July 29, 2011

Boomer bashing: how the idea evolved

Filed under: Economics, History, Media — Tags: , , , , , , — Nicholas @ 10:20

Frank Furedi looks at the evolution of the “bash the boomers” meme, and how it differs from more traditional generational conflict:

Gone are the days when the baby boomers were perceived as the personification of a relaxed but enlightened 1960s live-and-let-live lifestyle.

This cohort of people, generally defined as those born between 1945 and 1965, are globally pathologised as the source of most forms of economic and environmental distress. Constantly accused of living way beyond their means, the baby boomers are blamed for depriving the young of opportunities for a good life. They are condemned for thoughtlessly destroying the environment through their mindless pursuit of material possessions and wealth, as well as resisting change, hanging on to their power and preventing the younger generations from progressing.

[. . .]

The idea that ‘it’s all their fault’ captures the intense sense of cultivated immaturity of the parent-basher. A sentiment that is usually associated with the intellectual universe of a truculent five-year-old is now embraced in earnest by biologically mature generational warriors. Paul Begala’s Esquire article ‘The Worst Generation’ captures this sense of uncontained resentment. ‘I hate the baby boomer’, he wrote, concluding that ‘they’re the most self-centred, self-seeking, self-interested, self-absorbed, self-indulgent, self-aggrandising generation in American history’.

[. . .]

The guilt-tripping of boomers is underwritten by an unusually philistine interpretation of the way society works. The 18th-century Malthusian obsessions about natural limits has been recycled as a warning to human ambition. From this standpoint, resources are fixed and the consumption of one generation reduces what’s available to the next. Accordingly, the flipside of boomer wealth is the poverty of the generations coming of age today. Catastrophic accounts of how young people have been deprived of opportunities for a comfortable life have fostered a cultural climate where the moral status of the elderly is continually questioned.

[. . .]

One of the most distinctive feature of the denunciation of the baby boomers is that it lacks any hint of a future-oriented idealism. It is principally driven by a sense of resentment against a generation that apparently had a really good time.

Instead of tackling the question of how to create a prosperous future, anti-boomers are more interested in gaining a larger slice of the wealth created in the past. Baby boomer self-indulgence pales into insignificance in comparison to the low horizons of their unambitious critics.

Never has the term ‘rebels without a cause’ had more meaning than today. At least Bazarov’s nihilism was in part motivated by the cause of ridding Russia of its feudal autocracy. Even the Lost Generation of the inter-war period were responding to a very real event that shaped their existence. Today’s anti-boomers are freed from the burden of a cause to fight for. As Tyler Durden remarked in the 1999 film Fight Club: ‘Our generation has had no Great Depression, no Great War’, before adding that ‘our depression is our lives’.

July 26, 2011

The implied relationship between traffic tickets and corruption

Filed under: Economics, Law, Liberty — Tags: , , , — Nicholas @ 09:11

Tim Harford linked to this Forbes graphic showing an interesting correlation:

This nicely illustrates what he wrote in 2006:

An alternative view, popular among the common-sense crowd, is that corruption is a problem in Indonesia because Indonesians are crooks by nature; poor countries are poor because they are full of people who are lazy or stupid or dishonest. I disagree out of faith, rather than because the evidence is compelling. But then, what evidence could there be? You would need to take people from every culture, put them somewhere where they could ignore the law with impunity, and see who cheated and who was honest.

That sounds like a tall order for any research strategy, but the economists Ray Fisman and Edward Miguel have realised that diplomats in New York city were, in fact, the perfect guinea pigs. Diplomatic immunity meant that parking tickets issued to diplomats could not be enforced, and so parking legally was essentially a matter of personal ethics.

Fisman and Miguel found support for the common-sense view. Countries with corrupt systems, as measured by Transparency International, also sent diplomats who parked illegally. From 1997-2005, the Scandinavians committed only 12 unpaid parking violations, and most of them were by a single criminal mastermind from Finland. Chad and Bangladesh, regularly at the top of corruption tables, produced more than 2,500 violations between them. Perhaps poor countries are poor because they are full of corrupt people, after all.

July 24, 2011

Bank of Ireland “suffered a restructuring credit event”

Filed under: Economics, Europe — Tags: , , — Nicholas @ 10:46

I’m not fluent in banker . . . does this Reuters report really say that the Bank of Ireland is in default?

The ISDA said a restructuring credit event occurred after Bank of Ireland closed an offer to buy back about 2.6 billion euros of Tier 1 and Tier 2 subordinated debt at a discount of up to 90 percent earlier this month.

A credit event is financial industry jargon for default on payment, breach of bond covenants or other event that casts doubt on an issuer’s ability to service its debt.

If it does mean the bank is in default, how come it hasn’t received much attention in the media? (Aside from the focus being on Norway right now for other reasons, of course.)

H/T to Karl Denninger for the link.

July 23, 2011

Virginia’s state surplus less than meets the eye

Filed under: Economics, Government — Tags: , , — Nicholas @ 10:02

Doug Mataconis takes a jaundiced eye to the Virginia “surplus”:

So, in other words, what we’ve got here are accounting gimmicks. In one case, the State legally permitted itself to defer a contribution to public pensions that were twice as big as the reported budget surplus. In the other, they legally permitted themselves to collect thirteen months of sales taxes for a twelve month fiscal year. The impact of both of these should be rather obvious. Reduce obligations while you are increasing revenues and, wow what do you know, we’ve got a surplus.

This isn’t at all new. As Virginia political bloggers Norm Leahy and Adam Bitley noted last August, the legislature used virtually the same accounting tricks to create the $220 million surplus that was reported last year.

It’s also not unique to Virginia. The same techniques are used in states across the country, and in the Federal Budget. Call it “off book budgeting.” Call it “creative accounting.” Call it whatever you like really, but it’s a pretty stark demonstration of the just how hard it really is to believe any government when they say their budget is balanced. More likely than not, they’ve used one or more of these gimmicks, plus a few others, to defer budget items and artificially increase revenue to make it appear that the budget is in balance when it really isn’t.

July 21, 2011

Ontario Finance Minister lashes out after “backroom work-over” by “bare-knuckle bruiser(s)”

Filed under: Cancon, Economics, Media, Politics — Tags: , , , , — Nicholas @ 10:30

Terence Corcoran admits to roughing up poor Dwight Duncan along with his fellow thugs in the National Post dungeon editorial board meeting last week:

Speaking to reporters Wednesday, Mr. Duncan said the Post, along with other Ontario newspapers, are part of what he described as an intellectually dishonest, right-wing, Rupert Murdoch, conservative cabal.

Mr. Duncan, whose Liberal party faces what looks like a tough election this fall, had just been asked questions about Ontario’s alleged decline into “have-not” status. For some reason not explained, this line of questioning triggered a bizarre critique of Ontario’s newspapers and media: “The intellectual dishonesty, particularly of the right wing in this country, and the right-wing media, is they don’t tell the truth. It’s kinda like Rupert Murdoch.”

[. . .]

Not that the Post has been all that harsh of late. That editorial board meeting last Wednesday was a mild affair, a friendly exchange followed by polite banter, which Mr. Duncan said he enjoyed.

The next day the Post‘s editorial board produced an editorial of such modest criticisms and waffling ambiguity that the McGuinty Liberals could use excerpts as an endorsement.

This is why the Bank of Canada will raise rates soon

Filed under: Cancon, Economics — Tags: , , — Nicholas @ 09:58

Stephen Gordon explains why the Bank of Canada will be raising interest rates in the near term:

The relatively hawkish language in the Bank of Canada’s interest rate decision — most notably the removal of the word ‘eventually’ from the sentence describing the conditions in which interest rates will increase — took financial markets by surprise.

Central banks try to avoid surprises when they can, but in this case the Bank has the best of excuses: the facts changed.

[. . .]

These new numbers may well be revised away in the coming months, but policy makers have to work with the data they have before them. If you take an output gap that is shrinking much faster than you thought and add it to a core inflation rate that is drifting towards and perhaps past the Bank’s 2 per cent target, you will find yourself in a position where you have to start preparing to increase interest rates earlier than you had planned.

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