Quotulatiousness

November 6, 2010

Robert Fulford on Dierdre McCloskey’s latest book

Filed under: Books, Economics, History, Media — Tags: , , , , — Nicholas @ 12:19

As a dabbler in economic thought (but not an economist), I’m always interested in new books on different aspects of economics. Robert Fulford has probably prompted me to buy Deirdre McCloskey’s Bourgeois Dignity: Why Economics Can’t Explain the Modern World:

In a time of sharply limited budgets, this gives a special urgency to the ideas of Deirdre McCloskey, an economic historian at the University of Illinois. She thinks she knows how economic growth works.

Why did northwestern Europe begin growing rich in the 17th century, a process that continues to this moment? Why did various countries elsewhere in Europe have similar success, along with countries created by Europeans, including the United States and Canada?

McCloskey sets aside most of the reasons for prosperity that her academic peers identify. Scientific innovation, natural resources, education, Protestant theology, trade agreements — these can be important but they do not explain global patterns. Often, they are present in societies that have failed.

The West’s success, McCloskey believes, turns out to be a question of imagination, attitude and sensibility. It depends on how we talk and write about business — in fact, how people in the West feel about it.

Fulford also points out that McCloskey has had a very unusual life:

It’s not possible to write about McCloskey without noting the most remarkable aspect of her life, which she described eleven years ago in Crossing: A Memoir. In 1995, Donald McCloskey, a 52-year-old professor, married for 30 years, a father of two, realized that his real identity was as a woman. He began a program of hormone treatment, multiple surgeries and electrolysis, emerging as Deirdre.

As a scholar, she noted that this physical change involved a cultural transformation as well. Having been both a man and a woman, she drew up a long list of changes she’s discovered in herself. Here are a few of them. She cries, she likes cooking, she’s more easily startled by loud noises, she listens intently to stories people tell of their lives and craves detail. She can’t remain angry for long. She’s less impatient, drives less aggressively, has more friends. She’s stopped paying attention to cars and sports. And she feels duty-bound to wash the dishes.

The people in the bubble

Filed under: Cancon, Economics — Tags: , , , , — Nicholas @ 11:28

Margaret Wente has a little test for you to determine if you’re in the “elite”:

Before we venture further into this battle zone, you can calculate your elite status by taking this patented Elite-O-Meter test. See how you rate!

Your degree is from:

An American Ivy League university or Stanford (Score: +40)
Queen’s, McGill, the University of Toronto, Western or UBC (+20)
The University of Ottawa or other (-20)

Your children’s degrees are from:

An American Ivy League university, etc. (+30)
Queen’s, etc. (+10)
The University of Ottawa or other (-20)

What do these initials stand for?

NPR (+10 if you know)
MMA (-20 if you know)

(For Torontonians)

None of your friends voted for Rob Ford (+20)
One of your friends voted for Rob Ford (0)
You voted for Rob Ford (-20)

For a good time, you prefer

Luminato (+20)
A tailgate party in Buffalo (-20)

Who is Carol Off? (+20)

Who is Jimmie Johnson (not the football coach)? (-40)

To get some exercise, you prefer

Yoga and Pilates (+10)
Hunting and fishing (-20)

Have you ever had a housekeeper or nanny? (+10)

Have you ever been a housekeeper or nanny? (-20)

Have you ever had a job that made your feet tired by the end of the day? (Teaching, or jobs during high school and university, don’t count.) (-40)

As an adult, have you ever lived in a small town for at least a year? (University towns don’t count.) (-20)

Have you ever read a book by Michael Ignatieff? (+50)

Have you ever read a book by Tim LaHaye? (-20)

Your idea of good TV is

The Sopranos or Mad Men (+20)
Oprah or The Price is Right (-20)

Needless to say, the higher you scored, the more Elite you are. If you are on the plus side of the Elite-O-Meter, there’s a good chance you belong to Richard Florida’s Creative Class. You are probably (or soon will be) in the top 10 per cent of income earners, and you are probably married to someone a great deal like yourself. Congratulations! You are the product of the modern meritocracy. Although your family may have come from humble origins, you have joined the ruling class — the one that runs our major institutions, including governments, the law and the media.

For the record, I scored -70. That confirms what I suspected: I’m not “elite” by downtown Toronto standards.

November 5, 2010

Monty on the social security Ponzi scheme and Ireland’s coming crisis

Filed under: Economics, Europe, Politics — Tags: , , , — Nicholas @ 12:11

The always interesting Monty reminds everyone that social security won’t be there when you most need it:

Generational warfare is all but a certainty at this point as the lie that is Social Security festers and grows unchecked. All I can say is: reality will assert itself, sooner or later. Don’t get caught short — save enough of your own money to fund your own retirement, because Uncle Sugar is going to screw you just as surely as the sunrise. Pull quote:

There will be pain. The system will gore a lot of oxen. The obvious victims will be the oldsters who have become dependent on Federal handouts. They are a powerful swing vote today, but they are in the minority. When the majority of working citizens finally perceive that it is an inescapable choice between handouts to oldsters vs. their families’ solvency, they are going to vote away the oldsters’ handouts.

Social Security only survives at the suffrance of the taxpayers who fund it. Pay particular attention to the part where it’s explained in terrifyingly clear detail that it doesn’t matter how much you paid in: you were paying a tax, not a contribution to a savings account. Uncle Sam can legally stiff you at any time.

And on the Irish financial crisis:

That Irish austerity program just went from “painful” to “Oh my God I think I just barfed up a lung”. The problem in Ireland, as in Greece, is that you somehow have to convince your own citizens to accept dire reductions in their own quality-of-life to make sure that (mostly foreign) bondholders don’t have to take a haircut. I suspect that this strategy will fail, and end in default. Which, really, is probably the best course of action for the PIIGS — get off the Euro, go back to the old national currencies, and devalue. Yes, they will be shut out of the credit markets for a while, but not for all that long in relative terms. And the alternative — extreme civil unrest — is worse.

November 4, 2010

The continuing dramedy of the A400M

Filed under: Bureaucracy, Economics, Europe, Germany, Military — Tags: , , — Nicholas @ 12:09

Remember when the opposition were up in arms that Canada wasn’t going to be buying the new A400M for the Canadian Forces? That decision is looking better and better:

Germany has cut its order for A400M transports from 60 to 57. This was in response to demands from the manufacturer for more money. This is not a new problem, but for those who have already ordered the A400M, it’s getting old. The new European military transport, the A400M, is already three years late and billions of dollars over budget. Those who have already placed orders (for 180 aircraft) have been told that the price they thought they were going to pay ($161 million per aircraft) will go up twenty percent. In response, some major buyers said they were considering cancelling their orders. In turn, the manufacturer said that such actions would force the cancellation of the project. With the German reduction of its order, it looks like the A400M will be getting more expensive, to the point where it will be twice what the new C-130J costs. The A400M made its first flight 11 months ago.

[. . .]

During the Cold War, such air transports were very low priority in Europe, because if there was a war, the mighty Red Army of the Soviet Union was going to home deliver it. But now all the action is far away, and the military needs air freight for emergencies and other urgent missions. For that reason, the Russian An-124s get a lot of work from NATO nations. This aircraft can carry up to 130 tons of cargo, as well as outsized and extremely large cargo. The more numerous American C-17 can only carry up to 84 tons, while the new A400M can lift a maximum of 40 tons. The advantage of the two smaller airlifters is the ability to operate from shorter unpaved runways, which makes them less dependable on existing infrastructure. Russia has put the An-124 back into production, partly because of the delays in the A400M project.

Globe editorial: “Mr. Clement has much to explain”

Filed under: Cancon, Economics, Government, Politics — Tags: , — Nicholas @ 07:56

I keep wondering if there are any actual conservatives left in Stephen Harper’s merry band of economic nationalists:

Tony Clement, the federal Minister of Industry, has much to explain after his laconic rejection of BHP Billiton Ltd.’s application for permission to proceed with its offer to buy Potash Corp. of Saskatchewan Inc.

Canadians and investors around the world — not least Potash Corp.’s own shareholders — are entitled to learn what Mr. Clement thinks is the meaning of “net benefit” to Canada, in the words of the Investment Canada Act. Evidently, in his and his colleagues’ minds, free markets and the free flow of investment are not sufficient.

Canada, as an exporting nation, has far more to lose by kicking off this kind of protectionist move than any imaginable gains. We might as well write off any economic growth from exports if this is the new modus operandi of the federal government.

November 3, 2010

Will it really be a big change in Washington?

Filed under: Economics, Liberty, Politics, USA — Tags: , , , , — Nicholas @ 12:36

Monty: The flushing sound you just heard is California’s future

Filed under: Economics, Politics, USA — Tags: , , , , — Nicholas @ 08:57

Monty pronounces the final doom of California:

That sound you just heard was the State of California irretrievably flushing itself down the toilet.

[. . .]

California’s most dire problems right now are related to public-employee obligations (pensions and healthcare). The power of public-employee unions in California have held the State and local governments in thrall for years, and with the election of Jerry Brown as Governor, the people of California have opted to spray kerosene on a blaze that was already threatening to overwhelm them.

[. . .]

Well, the die has been cast, California. You have placed your fate into the hands of a political party and a governmental machine that cares for nothing except what it can squeeze out of you to keep the party-train rolling. There will come a time in the not-too-distant future when you will have cause to bitterly regret what happened last night, and to wonder when the disaster truly became unavoidable. Well, now you know: it happened last night when you elected Jerry Brown as your governor. You chose to kowtow to the labor unions; you chose to believe comforting lies rather than the horrible truth.

You will reap the whirlwind.

Update: A couple of Twitter updates from Iowahawk sum things up nicely.

10:28: Boxer, Brown, no on Prop 19: congrats, California. You have officially gone Full Retard.

11:05: And as if California wasn’t already full of idiots, lunatics, and drug abusers, I’m flying there this afternoon.

November 1, 2010

Shipping at Age-of-Sail speeds

Filed under: Asia, China, Economics, Germany — Tags: — Nicholas @ 12:40

In an attempt to save fuel, shipping lines have been ordering their ships to go slower. Some of them are now slower than 19th century clipper ships:

For those who haven’t followed the situation closely, many container ships right now have practiced ‘slow steaming’ due to a glut of ships being built worldwide.

Essentially, they are sailing at speeds well below their potential in order to reduce the supply of ships in the market, and thus support shipping rates.

The way this works is that the slower a ship sails, the fewer times it can make a round trip per year. Thus purposely sailing slowly reduces the effective supply of ships. It’s a response to insufficient shipping demand relative to the size of the global container shipping fleet.

Yet these poor shipping companies have taken this practice to such an extreme that many ships are now sailing at speeds slower than old clipper ships from the 1800’s.

H/T to Monty:

Overcapacity in shipping means lower demand for the finished goods overall. This is also a prime reason why export-driven economies (China, Germany) are in for a pretty dramatic adjustment soon. They’ve been counting on an economic recovery in America and Europe to soak up all that excess production, but it looks like things are going to stay weak for at least another six months to a year.

October 28, 2010

It’s “like asking an alcoholic to run a distillery”

Filed under: Cancon, Economics, Military, Politics — Tags: , , , — Nicholas @ 13:26

The dissent on the announced purchase of F-35 fighter jets continues to gain traction:

In an interview on CBC’s Power and Politics last night, Industry Minister Tony Clement admitted we are buying the F-35s because the military wants them. “It is the best plane on the market. I will say on your program, I’m not the expert. The military are the experts. Why don’t the Liberals take the word of the Canadian military on that?” he asked.

Let me count the ways. A brief read of the A-G’s report on the purchase of military helicopters suggests a host of reasons why allowing the Department of National Defence to dictate procurement is like asking an alcoholic to run a distillery.

Sheila Fraser’s report concluded that National Defence knew, but did not tell the politicians, that the helicopter it wanted was not an “off-the-shelf “ model, with a relatively low risk of cost and time overruns.

In the event, the total cost for the 15 Chinook heavy lift helicopters more than doubled to $4.9-billion from the $2-billion price tag when the project was presented to the Conservative government and approved. Helicopters that were initially scheduled to be delivered last July, now won’t be ready until June 2013 — a state of affairs Ms. Fraser decried as “totally inappropriate”.

I’m not convinced that the F-35 is the aircraft Canada actually needs, and the DND’s track record on equipment purchases combined with the ultra-spendy pricetag on the F-35 make me concerned that they’re going to put themselves in the same state as the British armed forces by over-committing to kit that they (that is, we) can’t afford.

A significant indicator of social decline

Filed under: Economics, Government, Politics, USA — Tags: , , , , — Nicholas @ 12:04

Monty puts his finger on the biggest social change since the 1960’s and posits the likely results:

The recipe for the decline and fall of the American republic: most people who receive government benefits will not willingly give them up, or even allow them to be reduced. They’ve been told that these benefits are a right so often by the so-called “progressives” that they’ve come to believe it, and any attempt to reduce their benefits amounts, in their eyes, to a civil-rights violation. This is what the welfare state leads to — an entire class of dependents who insist upon receiving the sweat of your brow not as charity or payment for services rendered, but as a birthright not to be denied them. Class warfare (between public-sector workers and taxpayers) and generational warfare (between the recipients of Medicare and Social Security and those who must fund it) is the only possible outcome if things do not change soon. And I don’t mean that in rhetorical or symbolic terms; I mean in actual, bloody, street-fighting terms. It’s the culture of grievance, of victimhood, of moral equivalence playing out in real time. As I wrote in an essay a while back, look at what’s happening in England and France right now. That is our future — only more violent — if we don’t change our ways.

October 27, 2010

Why can’t Chuck get his business off the ground?

Filed under: Bureaucracy, Economics, Government, Law, Liberty — Tags: , , — Nicholas @ 13:13

October 25, 2010

Amity Schlaes’ (condensed) The Forgotten Man

Filed under: Books, Economics, History, Politics, USA — Tags: , , , , , — Nicholas @ 13:07

An article encapsulating some of the key points of Amity Schlaes’ The Forgotten Man in PDF form:

We all know the traditional narrative of that event: The stock market crash generated an economic Katrina. One in four was unemployed in the first few years. It resulted from a combination of monetary, banking, credit, international, and consumer confidence factors. The terrible thing about it was the duration of a high level of unemployment, which averaged in the mid teens for the entire decade.

The second thing we usually learn is that the Depression was mysterious — a problem that only experts with doctorates could solve. That is why FDR’s floating advisory group — Felix Frankfurter, Frances Perkins, George Warren, Marriner Eccles and Adolf Berle, among others — was sometimes known as a Brain Trust. The mystery had something to do with a shortage of money, we are told, and in the end, only a Brain Trust’s tinkering with the money supply saved us. The corollary to this view is that the government knows more than American business does about economics.

Another common presumption is that cleaning up Wall Street and getting rid of white-collar criminals helped the nation recover. A second is that property rights may still have mattered during the 1930s, but that they mattered less than government-created jobs, shoring up home-owners, and getting the money supply right. A third is that American democracy was threatened by the rise of a potential plutocracy, and that the Wagner Act of 1935 — which lent federal support to labor unions — was thus necessary and proper. Fourth and finally, the traditional view of the 1930s is that action by the government was good, whereas inaction would have been fatal. The economic crisis mandated any kind of action, no matter how far removed it might be from sound monetary policy. Along these lines the humorist Will Rogers wrote in 1933 that if Franklin Roosevelt had “burned down the capital, we would cheer and say, ‘Well at least we got a fire started, anyhow.’”

To put this official version of the 1930s in terms of the Monopoly board: The American economy was failing because there were too many top hats lording it about on the board, trying to establish a plutocracy, and because there was no bank to hand out money. Under FDR, the federal government became the bank and pulled America back to economic health.

When you go to research the 1930s, however, you find a different story. It is of course true that the early part of the Depression — the years upon which most economists have focused — was an economic Katrina. And a number of New
Deal measures provided lasting benefits for the economy. These include the creation of the Securities and Exchange Commission, the push for free trade led by Secretary of State Cordell Hull, and the establishment of the modern mortgage format. But the remaining evidence contradicts the official narrative. Overall, it
can be said, government prevented recovery. Herbert Hoover was too active, not too passive — as the old stereotypes suggest — while Roosevelt and his New Deal policies impeded recovery as well, especially during the latter half of the decade.

H/T to Monty for the link.

QotD: Mark Steyn on China’s coming demographic bomb

Filed under: China, Economics, Quotations, USA — Tags: , , — Nicholas @ 12:29

In 2009, the US spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent times, then within a few years US interest payments on that debt will be covering the entire cost of the Chinese military. This summer, the Pentagon issued an alarming report to Congress on Beijing’s massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge US dominance in the Pacific. What the report didn’t mention is who’s paying for it.

Answer: Mr and Mrs America.

By 2015, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the US Department of Community-Organizer Grant Applications, will be entirely funded by US taxpayers. When the Commies take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it.

[. . .]

Chinese state-controlled enterprises are buying up everything from copper in Canada to zinc in Australia to bauxite in Jamaica. They’re doing what the first settlers did vis a vis the Indians: They sell us trinkets in return for our resources. That said, I disagree with the conclusion of this video. The danger from China is not its strength, but its underlying weaknesses: As I wrote in America Alone, it will get old before it gets rich, and, unless it’s planning on becoming the first gay superpower since Sparta, the millions of surplus young men whom the One-Child Policy has deprived of female companionship is a recipe for profound social convulsions. That’s actually worse news than if China was cruising to global hegemony — because it means their calculations on how the Sino-American relationship evolves are even less likely to align with ours.

Mark Steyn, “Campaign Countdown”, SteynOnline, 2010-10-25

In praise of Sir Wilfrid Laurier

Filed under: Cancon, Economics, Government, History, Liberty — Tags: , — Nicholas @ 09:04

One of the few Canadian prime ministers I can admit a genuine fondness for, Sir Wilfrid Laurier, gets a bit of recognition:

Last May in a casual dinner conversation with Canadian libertarians in Vancouver, I named the better presidents and prime ministers, respectively, of the United States and Great Britain. It suddenly occurred to me that I couldn’t name a single Canadian counterpart.

So I asked my dinner friends, “Among Canada’s political leaders, did you ever have a Grover Cleveland or a William Ewert Gladstone, a prime minister who believed in liberty and defended it?”

One name emerged, almost in unison: Sir Wilfrid Laurier. Embarrassed by my ignorance, I had to admit I had never heard of him. Never mind that he’s the guy with the bushy hair on the Canadian five-dollar bill; I just never noticed. Now that I’ve done a little research, I’m a fan.

Laurier’s political resume is impressive: fourth-longest-serving prime minister in Canada’s history (1896–1911, the longest unbroken term of office of all 22 PMs). Forty-five years in the House of Commons, an all-time record. Longest-serving leader of any Canadian political party (almost 32 years). Across Canada to this day, he is widely regarded as one of the country’s greatest statesmen.

It’s not his tenure in government that makes Laurier an admirable figure. It’s what he stood for while he was there. He really meant it when he declared, “Canada is free and freedom is its nationality” and “Nothing will prevent me from continuing my task of preserving at all cost our civil liberty.”

Laurier was the last Liberal leader who actually believed in “classic” liberalism, not the warmed-over socialism of later and current Liberal thought. We could use another Laurier today.

Studying bureaucratic bias

Filed under: Bureaucracy, Economics, Government — Tags: , — Nicholas @ 08:56

I’ve always thought that behaviour patterns of bureaucrats are fairly easy to predict: it all hinges on risk/reward. A bureaucrat with expectation of retiring at the peak of pension eligibility will have a very high aversion to risk — but not quite what most people refer to as risk. A bureaucrat has a built-in bias to “stay the course”, to avoid “rocking the boat”, and to prevent the kind of change that will introduce exceptions to normal process.

Expecting a bureaucrat to react like an entrepreneur is unrealistic, because the bureaucrat’s risks (loss of promotion opportunities, loss of status, but not usually loss of job) do not scale well against the possible rewards — except in particularly corrupt jurisdictions, bureaucrats do not directly benefit from making risky decisions.

Given that, is it any surprise that bureaucrats, as a whole, are quite unwilling to step outside “normal practice” or to allow variances, exceptions, or (sometimes) even common sense solutions?

I should be careful (except that I’m a blogger, where “careful” really just means “avoiding lawsuits”), because there’s a risk I’m suffering from one of the traits identified in behavioural economics, the illusion of competence in my preceding horseback judgement:

There is a fashionable new science — behavioral economics, they call it — which applies the insights of psychology to how people make economic decisions. It tries to explain, for instance, the herd instinct that led people during the recent bubble to override common sense and believe things about asset values because others did: the “bandwagon effect.” And it labels as “hindsight bias” the all-too-common tendency during the recent bust to imagine that past events were more predictable than they were. Behavioral economics has also brought us notions like “loss aversion”: how we hate giving up a dollar we have far more than forgoing a dollar we have not yet got.

But while there is a lot of interest in the psychology and neuroscience of markets, there is much less in the psychology and neuroscience of government. Slavisa Tasic, of the University of Kiev, wrote a paper recently for the Istituto Bruno Leoni in Italy about this omission. He argues that market participants are not the only ones who make mistakes, yet he notes drily that “in the mainstream economic literature there is a near complete absence of concern that regulatory design might suffer from lack of competence.” Public servants are human, too.

Mr. Tasic identifies five mistakes that government regulators often make: action bias, motivated reasoning, the focusing illusion, the affect heuristic and illusions of competence.

In the last case, psychologists have shown that we systematically overestimate how much we understand about the causes and mechanisms of things we half understand.

« Newer Posts — Older Posts »

Powered by WordPress