Quotulatiousness

April 26, 2010

Maxime Bernier: Harper’s successor?

Filed under: Cancon, Economics, Politics — Tags: , , , , — Nicholas @ 17:32

Okay, so Andrew Coyne doesn’t quite go so far as to say that Bernier is the next leader of the Conservative party, but he certainly makes a case for Bernier speaking for an under-represented viewpoint in that party — actual conservatives, even (whisper it) “libertarians”:

Let’s just pause for a moment to consider what an extraordinary thing Maxime Bernier is attempting. The former minister in the Harper government is widely said to be preparing the ground for a future leadership bid. How has he been going about it? Since January, Bernier has been methodically laying explosives beneath the government and detonating them at regular intervals, in speeches and writings that, while not overtly criticizing Conservative policy, point in precisely the opposite direction to that on which the government happens to be embarked.

[. . .]

I cannot think of a precedent for this performance. Bernier is careful not to attack the party’s current leadership — just everything they’ve been doing. Yet he could hardly be accused of heresy. He represents, to paraphrase Howard Dean, the Conservative wing of the Conservative party — the party’s soul, its core beliefs, varnished as they may be under layers of expediency, yet still there. Indeed, so contorted has the Conservative party become that many people insist he is merely giving voice to what the leader himself believes.

[. . .]

Indeed, as a libertarian conservative from Quebec, he may find he has more supporters in the West. I don’t suggest he will be leader, or should. His record in cabinet was decidedly mixed: a fine industry minister, he was a disaster at Foreign Affairs. Though the speeches are thoughtful, it remains unclear whether there is a man of substance behind them, not least after the Couillard fiasco. Yet his willingness to state brave truths openly, to call the party back to its authentic self, marks him as one to watch.

I’ve often asked folks what substantive difference there is between the current Conservative government and the previous Liberal government. Other than the colour of the party signs, there’s not much actual “conservative” governing going on.

April 22, 2010

Tonight’s 1st round of the NFL draft

Filed under: Economics, Football — Tags: , , — Nicholas @ 12:11

As in previous years, I have nothing useful to say about the draft because I don’t follow US college football — I don’t know the Heisman Trophy winner from the redshirt freshman at your local junior college. I’m so uninvolved that I won’t even catch the TV coverage.

My favourite team, the Minnesota Vikings, have eight picks in the draft (before the traditional horsetrading gets underway), and were expected to pick a cornerback in the first round (where they have the 30th pick). Yesterday, they signed former Eagle and Jet cornerback Lito Sheppard to a one-year contract, so they’re now expected to pick a defensive lineman . . . or maybe a quarterback (Tim Tebow, anyone?).

Under the circumstances, I did find this Wall Street Journal article quite interesting:

For a league that does many things well, the first round of the NFL draft is a mess.

The league gives its worst teams first crack at incoming college talent in the name of parity, but instead of giving bad teams a leg up, it often forces them to draft players they don’t really need at prices they can’t afford. Many top picks hold out of training camp before they sign, only to end up with enormous contracts that have little to do with their true value to a football team.

What’s more, as this page reported Wednesday, NFL teams have a 50% chance of blowing a first-round pick entirely — the sort of costly gaffe that can set a franchise back for years.

Granted that there is no perfect mechanism available to replace the current draft process, it’s pretty clear that improvements could be made. Gregg Easterbrook has been championing a rookie salary cap for several years, which would move the monster contract negotiations out from initial signing to a later date, allowing teams to pay more directly for demonstrated ability (but even that sort of system could be gamed, of course). As I wrote last year:

The story repeats, draft after draft, as highly touted college stars are taken early in the first round, sign megabucks contracts and then go into the witness protection program. A rookie salary cap would be in the interests of almost everyone: teams, veteran players, and rookies-not-taken-in-the-first-round. The only ones who’d see their situation change for the worse would be the first 32 players taken in the draft (who would now have to prove that they can make the transition to the pro league before being rewarded with big contracts).

Update, 10:45pm: Speaking of horse-trading . . . I just happened to check the New York Times liveblog, and Minnesota has traded their first round pick, #30, to the Detroit Lions. No Viking pick in the first round, but they get Detroit’s pick in the second round, #34 overall, plus a 4th (#100) and a 7th (#214) in exchange. QB Jimmy Clausen had slipped from a speculated top-10 pick all the way to 30, where the NY Times folks were speculating he’d be the Vikings’ pick. Don’t know if he’ll still be there at the 34th pick, or if the Vikings are even interested (the chatter had them interested in Tim Tebow, who went to the Denver Broncos with the 25th selection).

April 16, 2010

Exposing the truth about government-run Ponzi schemes

Filed under: Economics, Government, Politics — Tags: , , , — Nicholas @ 09:22

Kathy Shaidle is exactly right in her analysis of the key weakness of the Tea Party movement:

The Tea party movement contains the seed of its own failure

It preaches self-reliance and small government, but old people still want their pittance of gubmit cheese, ie Social Security.

If they/we were intellectually honest, we would be calling on the raising of the eligibility age to 90, which is more in line with Bismark’s original plan: a little pension for those who were never expected to live long enough to ever get it.

It was meant to be a “look how generous I am” gesture with no real impact; the original designers never thought we’d live long enough to cash the checks.

Older Tea Partiers (and all of us) should be petitioning the government to write everyone a one time check for the exact amount they were forced to contribute, plus maybe 5% interest if that is do-able.

And then the program should be abolished.

I hope most of my readers are not depending on their “government benefits” to get them through in their retirement years: the economics of the situation almost certainly won’t allow it. There are several problems with government-run retirement schemes, starting with the fact that most of them are not in any sense of the word “funded”. Most governments have been using the contributions as a giant low-interest revolving fund: you contribute, they withdraw and leave a promissary note in the kitty. The promissary note is drawn on you and your children. There is, technically speaking, no money in the kitty.

The people who will be worst hurt by the necessary changes to government pension schemes are the ones who earned too little (or spent too much) during their working lives and didn’t make any private provision for retirement. As Kathy points out, the first government pensions were designed so that most potential recipients would be unable to collect, because the start date of the pension income was set beyond the average lifespan of the population. Looking forward to a pension would be much less realistic today if the official “retirement age” was set to 90!

April 15, 2010

A very disturbing notion

Filed under: Economics, Europe, Government, Politics, USA — Tags: , , , — Nicholas @ 12:59

The Cato Institute’s Richard W. Rahn speculates about some very disturbing notions:

Politicians in developed countries have found that their citizens often get upset when inflation reaches high levels and then tend to vote out the culprits. You may recall that the less-than-astute Jimmy Carter lost his re-election campaign, in part, because inflation at one point reached 14 percent and the prime interest rate hit 21 percent.

An insightful European banker suggested to me over breakfast a couple of weeks ago that the European political class would use selective expropriation, rather than inflation, to avoid paying back all of the debt. The way this would be done would be that the political leaders would announce they would only pay back those bonds with full interest that were held by labor unions and other “politically correct” interest groups but not the bonds held by “greedy bankers” and rich people. Maturities would be extended and promised interest rates lowered – effectively reducing the value of the bonds.

My initial reaction was that, yes, such a selective expropriation might work in Europe, but not in the United States. As I thought more about it, however, looked at what was happening and heard President Obama’s rhetoric attacking “greedy” bankers and insurance companies, I began to think that not only was my European friend right about Europe, but his scenario was equally valid here.

The Obama administration has already indicated that it’s quite comfortable with protecting unions at the expense of other contracting parties (in the Government Motors case, at the very least), so it’s not much of a stretch to see this as a possibility in larger matters.

QotD: Chinese espionage in Canada

Filed under: Cancon, China, Economics, Quotations — Tags: , , — Nicholas @ 12:39

China’s not buying our oil; it’s buying the reliable flow of Canadian corporate profits and our stable economic outlook.

Is it a national security risk to Canada?

No, again. It is true that, according to CSIS, the Chinese government represents the largest espionage threat to Canada, stealing the equivalent of $1-billion a month from our country in industrial secrets. (That’s more than our annual exports to China.)

But that espionage is done illegally by Chinese students, expats and other sympathizers, not through the legal ownership of share certificates. No doubt our high-tech energy secrets are being stolen and will continue to be stolen, but that is not happening because of a Wall Street deal. The central strategic value of the oil sands is not at risk.

Ezra Levant, “Pipeline to Asia”, National Post, 2010-04-15

Properly defining what are “public goods”

Filed under: Economics, Law, Media, Technology — Tags: , , , , — Nicholas @ 07:50

Milena Popova, guest-blogging while Charles Stross is out experiencing Japan, has a long discussion up about public goods and why content (digitally speaking) is a classic example:

There’s a theory in economics about things called “public goods”. To understand the distinction between private goods, public goods and the couple of shades of grey in between, you first need to get your head around two concepts: rival and excludable.

Rival: (Wikipedia seems to call this “rivalrous”, but when I were a young economist lass we used to call it rival so I’ll stick with that.) A good is rival if my consumption of it diminishes the amount of the good that you can consume. Say we had 10 apples, and I ate one. There would now be 9 apples left which you could eat. If we had one apple and I ate all of it, tough luck, no apples for you. Knowing whether a good is rival or not tells you whether you want to use the market (if I were a good economist that would possibly be capital-M Market 😉 to allocate access to that good. If it’s rival, then the market is an efficient way of allocating the good; if it’s not, then you might want to think about other ways of getting your good to people. Remember that scary anti-piracy clip at the start of your DVDs which says “You wouldn’t steal a handbag”? Hold that thought for a minute.

Excludable: A good is excludable if you physically have a way of stopping people from consuming it. Back to the apples: if they’re in my fridge, inside my locked house and you don’t have a key, you can’t have my apples. (Yes, yes, you could break in. The law provides additional protection here, but ultimately there’s probably a better way for you to obtain an apple than breaking into my house, right?) Knowing whether a good is excludable tells you whether you can use the market to distribute the good. If your good is excludable, go ahead and sell it on the open market; if it’s not — you might struggle because you can’t stop people from just taking it for free.

So. Most of the goods you deal with in your day-to-day life are both rival and excludable. We call them pure private goods. But there’s a few things here and there that aren’t as clear-cut, and this is where it gets a little messy.

April 12, 2010

New “green” jobs to pay over $300K

Filed under: Cancon, Economics, Environment — Tags: , , , , , , , — Nicholas @ 15:49

Oh, wait. Sorry, that should be will cost over $300K:

The Government of Ontario recently signed a $7 billion no-bid contract with two Korean companies to supply wind and solar power to the province. Officials claim the backroom deal will boost “green” industry and job creation. But it’s hard to fathom how the additional employment can possibly be beneficial when each new manufacturing job will cost taxpayers a whopping $303,472. Nor do dramatic increases in electricity rates constitute much of a bargain.

Having failed on his pledge to shutter all coal-fired plants in the province by 2007, Ontario Premier Dalton McGuinty evidently has sought a grand green gesture that would appease the global warming alarmists. Executives of Samsung C&T Corp., in concert with the Korean Electric Power Corporation, were understandably eager to cooperate.

The agreement commits the province to buy wind and solar energy from the two companies at artificially high rates. It also extends to Samsung and Korean Power preferential access to the transmission network at the expense of independent wind power producers. As if either provision won’t adequately punish Ontarians, McGuinty also has pledged to override local zoning laws in locating new wind farms and transmission corridors.

Update, 12 February 2011: Even Premier McGuinty can only deny financial reality for so long:

Times of international turmoil are great moments for domestic governments to make important announcements they don’t want to be noticed. Especially if the announcement involves a sudden reversal in policy that could seriously embarrass the government.

So Friday afternoon was an ideal time for Ontario’s Liberal government to take a big chunk of its alternative energy program and chuck it overboard. Attention was riveted on Egypt, where spectacular events were unfolding. The perfect opportunity for Premier Dalton McGuinty to engineer yet another major reversal, while paying a minimal price among voters.

After years of touting wind projects as a critical piece of the alternative energy puzzle, the government let slip — very quietly — that offshore wind projects are no longer part of the game plan. Turns out there just isn’t enough scientific evidence that offshore wind projects do a lick of good, said Brad Duguid, the energy minister.

April 6, 2010

Recommended to your attention

Filed under: Cancon, Economics, USA — Tags: , , , , — Nicholas @ 22:13

A link from the latest Reason Online mailing led to this article, which is quite worth reading, if only for the pro-Canadian/anti-Soviet-Canuckistan comments:

The Hate-America-First outfit Heritage Foundation says the U.S. of A. may be a tad freer when it comes to economics than trans-fat-free Denmark, land of free speech for Islamo-dumbkopfs, but is less free than Canada, a country whose greatest export remains a former pitchman for Molson Export and one of both of the stars of the original Star Trek series

And some of the amusing comments:

¢: I’ll assume they say Canada’s freer because it’s much, much whiter. White supremacists always rank Hong Kong at the top of things.

Ken Shultz: I don’t have the stats handy, but I think the notion of Canada being remarkably “white” is a bit of a misconception . . . especially if by “white” you mean some sort of uniform ethnicity.

From aboriginals and metis to the francophones in Quebec, and from the ethnic Chinese in Vancouver to the “Newfies”, I think Canada’s a lot more diverse than most Americans give them credit for.

It’s almost an American conceit, I guess, that when we look at the rest of the world, we don’t think it’s diverse unless more than 10% of the population is of African ancestry? [. . .]

dr duncan druhl: If you lived near Francophones, Francophiles, or just the French in general, trust me, you’d buy that they are a very distinct group. The ones in Canada are strange because they can’t stand the French because the France-French look down their nose at them for their strange dialect, which is probably as close to common street French from the 16th and 17th century as we’ll likely find anywhere.

creech: Canadians are too modest to start bragging about this. Canadian tax rates are such that the boss is starting to jigger intercompany pricing to move profit from the U.S. to Canada. Used to be the other way around.

Force shits upon Reason’s back: Canadians are too modest

Have you ever met a Canadian? They have many fine traits; modesty is not among them.

March 31, 2010

More on the growth in public sector employment

Filed under: Bureaucracy, Economics, Education, Government, Politics, USA — Tags: , — Nicholas @ 09:11

More on this topic here, here, here, here, and here.

March 30, 2010

I guess I can’t complain

Filed under: Cancon, Economics — Tags: , , , — Nicholas @ 12:17

According to the latest figures, my commute is only a bit longer than average for Toronto:

After more than six years of enlightened, environmentally-conscious left-wing government under a pro-transit mayor with a compliant anti-auto city council, Toronto has been told its gridlock is among ther worst in the world.

The Toronto Board of Trade surveyed 19 cities and found that commuting times in Toronto are the longest of the lot. Worse than London. Worse than New York. Worse than Los Angeles. Worse than Berlin or Milan. The average beleaguered Torontonian spends 80 minutes a day trying to get to and from work.

Imagine what it would be like without an enlightened, activist, pro-transit city government.

Well over half of my commuting time is spent inside the city boundaries, even though it constitutes a bit less than half the total distance. I’m fortunate that I don’t have to do my commute every day of the week . . .

March 29, 2010

Americans to lose privacy in offshore banking

Filed under: Economics, Government, Liberty, USA — Tags: , , , — Nicholas @ 09:27

Of course, the headline assumes that they had any such privilege in the past . . .

Samuel Taliaferro is disturbed by provisions in a new law which will extend US government intervention into foreign bank business:

The name of the bill is the Hiring Incentives to Restore Employment Act (H.R. 2487) commonly known as the HIRE Act. This is the jobs incentive bill that was signed by the President on March 18th amid little fanfare.

Relatively small by Washington standards (“just” an $18 billion stimulus package) the bill was drafted to provide incentives to employers to hire more people but contains some very disturbing language concerning the ownership and transference of money to any overseas account. The truly galling part of the bill is that it attempts to require “foreign financial and non-financial institutions to withhold 30% of payments made to such institutions by U.S. individuals unless such institutions agree to disclose the identity of such individuals and report on the bank transactions”. Think about this — the U.S. government is attempting to strong arm foreign financial and non-financial institutions (think banks and law firms) to either withhold 30% of the transactions in a U.S. individual’s account (and presumably remit this to the U.S. Treasury) or disclose the account details to the U.S.. The language of the bill addresses both bank accounts and any foreign trusts (ie- Private Interest Foundations).

In other words, the US government is afraid more Americans are going to be worried about the security of their money and will look to offshore institutions to preserve their savings. The government is moving pre-emptively to deter that flow of money away from their direct control. You’d almost think they didn’t trust their own citizenry.

Costs continue to rise for F-35B aircraft

Filed under: Economics, Europe, Military, USA — Tags: , , , , , — Nicholas @ 08:47

Strategy Page has more on the increasing spendiness of the F-35 program, especially the part the Navy is most concerned about:

Denmark has decided to wait, until 2014, to decide what to replace its elderly F-16 fleet with. Meanwhile, 18 of the F-16s will be retired. But the other 30 will be refurbished so that they can continue to operate for the rest of the decade. Denmark had wanted to replace the F-16s with F-35s. But the F-35s keeps getting delayed (now more than two years behind schedule), and is becoming more expensive (nearly a hundred percent over budget). The Danish F-35 buy is no longer a sure thing. The delays have lots of users concerned. The U.S. Navy has been nervously watching as the costs of the new F-35C and F-35B carrier aircraft versions go up.

It comes down to this. Currently, it costs the navy, on average, $19,000 an hour to operate its AV-8 vertical takeoff and F-18C fighter aircraft. It costs 63 percent more to operate the F-35C (which will replace the F-18C) and the F-35B (which will replace the AV-8). These costs include buying the aircraft, training and maintaining the pilots, the aircraft and purchasing expendable items (fuel, spare parts, munitions.) Like the F-22, which recently had production capped at less than 200 aircraft, the capabilities, as superior as they were, did not justify the much higher costs. The F-35, at least for the navy, is headed in the same direction. The navy can go ahead with the more recent F-18E, and keep refurbishing, or even building, the AV-8. Politics, and lobbying by the F-35 manufacturer, will probably keep the F-35 headed for fleet service, no matter what the cost.

Another ally watching the F-35B costs rise with trepidation is the Royal Navy, whose aircraft carriers are not able to handle conventional aircraft (even the two large carriers under construction won’t have catapults for launching non-STOL planes). Earlier posts on the Royal Navy’s carrier worries here and here.

March 26, 2010

Times to go pay-for-access in June

Filed under: Britain, Economics, Media — Tags: , , — Nicholas @ 09:31

The editors of the Telegraph, Guardian, and Daily Mail rub their hands in glee, anticipating more page views from former casual Times readers:

The Times and The Sunday Times will become the first British newspapers to charge readers to access the titles online from June, Rupert Murdoch’s News International announced on Friday.

Customers will have to pay one pound for one day’s access and two pounds for a week’s subscription, in a move that will be closely watched in a newspaper industry suffering steadily dropping sales.

Both Times titles will launch new websites in early May, replacing the existing combined site, Times Online.

I rarely link to Times articles as it is, so their decision to pull everything behind a paywall won’t have much direct effect on my reading habits. If it’s a success (for varying values of “success”), other newspapers may follow suit. That might start to impact me, as I do link to articles from other British newspapers on a more regular basis.

Personally, I think this move won’t work, but it’ll be interesting watching the experiment happen.

March 24, 2010

Using carbon dating to detect fake vintage wines

Filed under: Economics, Law, Technology, Wine — Tags: — Nicholas @ 13:22

Jon, my former virtual landlord, sent me this link on a subject I’ve blogged about before: detecting fakery and fraud in the fine and vintage wine market:

Up to 5% of fine wines are not from the year the label indicates, according to Australian researchers who have carbon dated some top dollar wines.

The team of researchers think “vintage fraud” is widespread, and have come up with a test that uses radioactive carbon isotopes left in the atmosphere by atomic bomb tests last century and a method used to date prehistoric objects to determine what year a wine comes from — its vintage.

[. . .]

“The problem goes beyond ordinary consumers being overcharged for a bottle of expensive wine from a famous winery with a great year listed on the label, that isn’t the right vintage year,” Jones said.

“Connoisseurs collect vintage wines and prices have soared with ‘investment wines’ selling for hundreds of thousands of dollars a case at auction,” he said.

I read Benjamin Wallace’s The Billionaire’s Vinegar which was rather an eye-opener about both the rare wine trade and the potential for fraud in that market (posts here and here). It’s nice to see that technology is coming to the rescue in cases where this kind of fraud is suspected.

March 23, 2010

Stimulus did little, private sector did much more

Filed under: Cancon, Economics, Government — Tags: , — Nicholas @ 12:09

Despite all the expensive ads (especially noticeable during the Vancouver Olympic coverage), it wasn’t the federal government’s stimulus package that has been creating jobs: it was the private sector:

Canada’s economic fortunes have seen a dramatic turnaround in the last year, but according to a new study by one of the country’s leading think-tanks, it had little to do with the federal government’s $47.2-billion Economic Action Plan.

The Fraser Institute released a study Tuesday that found that government stimulus packages contributed only 0.2 percentage points to the rise in GDP between the second and third quarter of 2009 and nothing between the third and fourth quarter.

The group found that it was private-sector investment and increased exports that were the driving forces behind the change in GDP growth.

“Although the federal government has repeatedly claimed credit for Canada’s improved economic performance in the second half of 2009, Statistics Canada data show that government spending and investment in infrastructure had a negligible effect on the country’s improved economic growth,” said the Fraser Institute’s senior economist, Niels Veldhuis.

Here is the news release from the Fraser Institute.

This shouldn’t be a surprise: the stimulus was, and continues to be, a media exercise much more than it was an economic plan. As with any outcry in the mass media, the government had to be seen to be doing something, regardless of the likely success. The illusion of positive motion was necessary, and the federal government knows it has little wiggle room as far as the mainstream media is concerned — doing nothing was not going to be an acceptable choice, even if doing nothing was the “correct” response.

The government can’t really “create” jobs — although it certainly can destroy ’em — most of the jobs “created” in response to government funding are going to go away as soon as that funding dries up. There’s no economic justification for them to exist, absent the stimulus money. If there was an economic justification, private employers would have created them (where not hindered by government action of one form or another, that is).

The increase in public sector employment is unsustainable: the money to pay salaries and benefits (ahem), training, equipment, and facilities all has to be taxed from individuals and companies. The more public sector jobs, the greater the drain on the private sector. The greater the burden placed on the private sector, the slower the growth of the economy. As you approach the “break even” point, where the private sector can no longer fund all the demands from the public sector, the economy gets more and more sluggish — no sane private employer is going to expand business if there’s no profit to be made. No expansion means no new jobs.

It might be possible for us all to live by “taking in one another’s laundry”, but it’s not possible for us all to live by approving permission forms, having meetings, and bureaucratic empire-building.

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