Quotulatiousness

April 20, 2020

“New York City subways were ‘a major disseminator — if not the principal transmission vehicle — of coronavirus infection'”

Filed under: Government, Health, Politics, Railways, USA — Tags: , , , , , — Nicholas @ 05:00

Randal O’Toole wonders why the lone sacred cow of mass transit is still running, despite its potential role in spreading disease:

MTA NYC Subway 1 trains at 125th St., 14 May, 2018.
Photo by Mtattrain via Wikimedia Commons.

Sit‐​down restaurants and bars have been shut down. Public officials are discouraging or even forbidding people from doing “unnecessary travel,” even if it is to visit a second home where they might be able to socially distance themselves better than in their first, more urban home. All sorts of other rules are being passed, all supposedly for our own good.

So why are urban transit systems still running? A 2018 study found that “mass transportation systems offer an effective way of accelerating the spread of infectious diseases.” A 2011 study found that people who use mass transit were nearly six times more likely to have acute respiratory infections than those who don’t. Not surprisingly, a study published a few days ago found that New York City subways were “a major disseminator — if not the principal transmission vehicle — of coronavirus infection.”

Transit agencies say they are helping “essential workers” go about their business. But if they are so essential, isn’t it important to find them a safe way of getting to work? If we truly cared about people’s safety, then transit services should have shut down at the same time we closed other non‐​essential businesses and asked people to stay at home.

[…]

Unfortunately, the transit lobby has successfully turned government‐​subsidized transit into a sacred cow. Transit is supposedly greener than driving when in fact it’s an energy hog. Transit is supposedly needed to help poor people get to work when in fact the people most likely to commute by transit are those earning more than $75,000 a year.

When the pandemic took away most of transit’s customers, instead of shutting down, which would have been the responsible thing to do, transit agencies demanded that Congress give them $25 billion, tripling federal support to transit this year. Thanks to transit’s sacred cow status, Congress agreed without any serious debate.

Effectively, Congress rewarded the agencies for spreading disease. It would have been better to use that money to help transit‐​dependent essential workers buy a car so they could have a safe way of getting to work.

New York City subway system.
Image by Jake Berman (maps.complutense.org) based on information from the MTA, via Wikimedia Commons.

The four distinct phases of the Great Depression in the United States

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

An older post from Lawrence W. Reed at the Foundation for Economic Education outlines the low points of the Great Depression and debunks a few widely held myths about that cataclysmic economic era:

Phase 1, the Federal Reserve and the end of the Roaring 20’s:

One of the most thorough and meticulously documented accounts of the Fed’s inflationary actions prior to 1929 is America’s Great Depression by the late Murray Rothbard. Using a broad measure that includes currency, demand and time deposits, and other ingredients, Rothbard estimated that the Federal Reserve expanded the money supply by more than 60 percent from mid-1921 to mid-1929. The flood of easy money drove interest rates down, pushed the stock market to dizzy heights, and gave birth to the “Roaring Twenties.”

By early 1929, the Federal Reserve was taking the punch away from the party. It choked off the money supply, raised interest rates, and for the next three years presided over a money supply that shrank by 30 percent. This deflation following the inflation wrenched the economy from tremendous boom to colossal bust.

The “smart” money — the Bernard Baruchs and the Joseph Kennedys who watched things like money supply — saw that the party was coming to an end before most other Americans did. Baruch actually began selling stocks and buying bonds and gold as early as 1928; Kennedy did likewise, commenting, “only a fool holds out for the top dollar.”

Phase 2, Hoover’s interventions and the disaster of Smoot-Hawley:

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 Wikimedia Commons.

Unemployment in 1930 averaged a mildly recessionary 8.9 percent, up from 3.2 percent in 1929. It shot up rapidly until peaking out at more than 25 percent in 1933. Until March 1933, these were the years of President Herbert Hoover — the man that anti-capitalists depict as a champion of noninterventionist, laissez-faire economics.

Did Hoover really subscribe to a “hands off the economy,” free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of presiding over “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, charged that Hoover was “leading the country down the path of socialism.” Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war. Professor Barry Poulson notes that not only were 887 tariffs sharply increased, but the act broadened the list of dutiable commodities to 3,218 items as well.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Phase 3, FDR and the New Deal:

Top left: The Tennessee Valley Authority, part of the New Deal, being signed into law in 1933.
Top right: FDR (President Franklin Delano Roosevelt) was responsible for the New Deal.
Bottom: A public mural from one of the artists employed by the New Deal’s WPA program.
Wikimedia Commons.

Franklin Delano Roosevelt won the 1932 presidential election in a landslide, collecting 472 electoral votes to just 59 for the incumbent Herbert Hoover. The platform of the Democratic Party whose ticket Roosevelt headed declared, “We believe that a party platform is a covenant with the people to be faithfully kept by the party entrusted with power.” It called for a 25 percent reduction in federal spending, a balanced federal budget, a sound gold currency “to be preserved at all hazards,” the removal of government from areas that belonged more appropriately to private enterprise, and an end to the “extravagance” of Hoover’s farm programs. This is what candidate Roosevelt promised, but it bears no resemblance to what President Roosevelt actually delivered.

In the first year of the New Deal, Roosevelt proposed spending $10 billion while revenues were only $3 billion. Between 1933 and 1936, government expenditures rose by more than 83 percent. Federal debt skyrocketed by 73 percent.

[…] in 1935 the Works Progress Administration came along. It is known today as the very government program that gave rise to the new term, “boondoggle,” because it “produced” a lot more than the 77,000 bridges and 116,000 buildings to which its advocates loved to point as evidence of its efficacy. The stupefying roster of wasteful spending generated by these jobs programs represented a diversion of valuable resources to politically motivated and economically counterproductive purposes.

The American economy was soon relieved of the burden of some of the New Deal’s excesses when the Supreme Court outlawed the NRA in 1935 and the AAA in 1936, earning Roosevelt’s eternal wrath and derision. Recognizing much of what Roosevelt did as unconstitutional, the “nine old men” of the Court also threw out other, more minor acts and programs which hindered recovery.

Phase 4, the Wagner Act:

The stage was set for the 1937–38 collapse with the passage of the National Labor Relations Act in 1935 — better known as the Wagner Act and organized labor’s “Magna Carta.” […] Armed with these sweeping new powers, labor unions went on a militant organizing frenzy. Threats, boycotts, strikes, seizures of plants, and widespread violence pushed productivity down sharply and unemployment up dramatically. Membership in the nation’s labor unions soared; by 1941 there were two and a half times as many Americans in unions as in 1935.

[…]

Higgs draws a close connection between the level of private investment and the course of the American economy in the 1930s. The relentless assaults of the Roosevelt administration — in both word and deed — against business, property, and free enterprise guaranteed that the capital needed to jumpstart the economy was either taxed away or forced into hiding. When Roosevelt took America to war in 1941, he eased up on his antibusiness agenda, but a great deal of the nation’s capital was diverted into the war effort instead of into plant expansion or consumer goods. Not until both Roosevelt and the war were gone did investors feel confident enough to “set in motion the postwar investment boom that powered the economy’s return to sustained prosperity.”

April 19, 2020

In healthcare matters, Confederation is working as intended

Filed under: Cancon, Europe, Government, Health — Tags: , , — Nicholas @ 03:00

Chris Selley on the viewing-with-alarm concerns that we don’t have a single nation-wide standard of care, and why the Swedish approach to the Wuhan Coronavirus epidemic is worth observing closely:

Front view of Toronto General Hospital in 2005. The new wing, as shown in the photograph, was completed in 2002.
Photo via Wikimedia Commons.

Last week, Maclean’s reported on a group of University of Ottawa researchers who had found, to their consternation, that each province offers different advice to people who think they might be showing coronavirus symptoms. “Even in a cross-Canada pandemic as devastating as this, there is not a single, evidence-based Canadian standard of care simply for self-assessment,” the researchers wrote.

It’s strange how many Canadians seem uncomfortable with the most basic design of their country, which is that of a federation. What the U of O researchers find alarming is not just a matter of Canada operating as it was intended to operate, but also a good example of the benefits. Provinces and territories can shape their responses to the needs of their populations. They can learn from each other what works. It’s a living laboratory.

In the same vein, assuming things don’t go catastrophically wrong, we should be thankful that Sweden is sticking to its guns in avoiding a total lockdown. That, too, will provide very useful data in preparation for COVID-the-next.

It is important to realize that lockdowns take a human toll, sometimes fatal, just like coronaviruses (though probably not on the same scale). Emergency room doctors are worried about their lack of business nowadays, the National Post‘s Richard Warnica reported Friday. “Doctors believe … patients who are afraid of contracting COVID-19 are just waiting (to seek treatment) and getting sicker,” Warnica reported. The head of a Vancouver ER department noted that opioid overdose deaths are up, even as his hospital treats far fewer. Are they overdosing alone, whereas before they might have been saved? When we postmortem this pandemic, we will hear about sexual and domestic assaults, suicides and other isolation-related harms. They will need to be weighed against the risks inherent in a less draconian approach.

Sweden’s strategy has been somewhat caricatured. High schools and universities closed; people aged 70 or older were advised to self-isolate; large gatherings ceased. Easter travel was down a reported 90 per cent. More Swedes have reportedly filed for unemployment benefits than during 2008 crash. Restaurants, pubs and cafés remain open, which seems unfathomable to a Canadian. But “it’s a myth that it’s business as usual,” as Sweden’s deputy prime minister Isabella Lovin told the Financial Times this week.

April 18, 2020

Chairman Xi, the Wuhan Coronavirus, and the “Mandate of Heaven”

Filed under: China, Government, Health, Politics — Tags: , , , — Nicholas @ 03:00

David Warren:

It is a little-known fact that no government can do anything, without the cooperation of its victims. Of course that cooperation may be obtained by force and falsehood, but there will always be a few people who won’t play along. This creates a “technical problem” for the tyrant, which can also be solved by violence and deceit, but in the heart of every dictatorship there must be calculations. At what point do so many people want us dead, that they will actually kill us?

This is a political calculation, and it can turn even a genocidal maniac into a thoughtful politician. A monstrously evil country, such as Red China, can be moderated in this way. Superficially, it may sometimes come to resemble a bourgeois, Westernized, rule-of-law state, like Japan, Taiwan, South Korea. It may, indeed must in its own interest, pretend to be benign. But under sufficient pressure it has only two choices. One is to be openly monstrous, with all the risks that entails; and the other is to disintegrate.

My interest has been piqued as a China-watcher. Recent events have been bringing that kettle back to the boil. That the Peking politburo has been making serious mistakes, we may observe. It could not possibly have intended the Batflu crisis, which its own malign incompetence brought about. But as it tries to manage the crisis, for its own purposes, the mistakes multiply. Even the people it had diligently bought — such as our progressive journalists, politicians, and businessmen — are turning against it.

Within China itself, the unthinking default loyalty of the masses, has been disturbed. “Narratives” which conflict with the official ones are circulating, along with the virus — and even among those who “test negative,” as it were. These are people who would never rebel, but they become sympathetic to rebels. Moreover, the state’s image of invincibility — the Mao/Xi portrait, a hundred feet tall — is cracking. Imagined lines of contempt appear in the plaster. Chairman Mao, of course, is dead, but Chairman Xi must be sensing his mortality.

As the Soviet Union was collapsing from within, progressive Westerners tried to ignore it. This wasn’t something they wanted to look at, which is why they were all taken by surprise. The fall of the Berlin Wall inwardly distressed everyone on the Left. For a few years their confidence was shaken, slowing their efforts to regroup around “environmentalism,” or some alternative leftwing cause, that wasn’t in shambles like socialism. But eventually their smugness recovered, and those revealed to have been absolutely wrong about everything they had ever told us, were able to resume their status as “experts.”

From Wikipedia‘s entry on the Mandate of Heaven:

The Mandate of Heaven (Chinese: 天命; pinyin: Tiānmìng; Wade–Giles: T’ien-ming, literally “Heaven’s will”) is a Chinese political and religious teaching used since ancient times to justify the rule of the King or Emperor of China. According to this belief, Heaven (天, Tian) — which embodies the natural order and will of the universe — bestows the mandate on a just ruler of China, the “Son of Heaven” of the “Celestial Empire”. If a ruler was overthrown, this was interpreted as an indication that the ruler was unworthy, and had lost the mandate. It was also a common belief that natural disasters such as famine and flood were divine retributions bearing signs of Heaven’s displeasure with the ruler, so there would often be revolts following major disasters as the people saw these calamities as signs that the Mandate of Heaven had been withdrawn.

[…] The Mandate of Heaven was often invoked by philosophers and scholars in China as a way to curtail the abuse of power by the ruler, in a system that had few other checks. Chinese historians interpreted a successful revolt as evidence that Heaven had withdrawn its mandate from the ruler. Throughout Chinese history, times of poverty and natural disasters were often taken as signs that heaven considered the incumbent ruler unjust and thus in need of replacement.

April 17, 2020

Chris Selley – “… if John Q. Bylaw is hassling you just for taking a walk, for heaven’s sake get your smart phone out and make a righteous stink”

Filed under: Cancon, Government, Health, Law, Liberty — Tags: , , , , , , , — Nicholas @ 03:00

Our proto-surveillance society is moving rapidly toward all-surveillance, all the time and the current justification is to fight the Wuhan Coronavirus epidemic:

For civil libertarians, these are alarming times — but less alarming than they might be. During a pandemic, when everyone agrees life cannot go on as normal, people who place maximum value on individual freedom are liable to look rather selfish. “Trust our leaders” types get a big boost.

But if Canadian officialdom has not botched its response to this crisis, neither has it excelled. Theresa Tam’s defenders are right that official advice will naturally change over the course of a pandemic — but nothing justifies her proactive downplaying of the COVID-19 risk at a time when several Canadian governments were, we now know, woefully unprepared. The pandemic doesn’t care that Prime Minister Justin Trudeau went to Harrington Lake, against advice from three governments including his own to stay away from any second homes — but it would have been so bloody easy for him not to go, to set an example. It’s equally inconsequential that Andrew Scheer added six more human beings than necessary to a government charter flight from Regina to Ottawa — and it would have been equally easy for him not to bring his family along.

Meanwhile, certain big Canadian cities have so obviously overstepped the mark, by cracking down on perfectly safe behaviours — walking in parks, notably — as to highlight the value of some don’t-tread-on-me pushback. An unscientific survey of social media suggests not a single real human being supports the City of Ottawa’s latest ridiculousness: Days after its bylaw officers threatened a father and son for kicking a ball around [noted here], fined a man $880 for walking his dog, and allegedly assaulted a man questioning his eviction from a park — none of which seems to be supported by the provincial emergency act they were ostensibly enforcing — a public health official now advises against exchanging properly distanced outdoor pleasantries with one’s neighbours lest it “turn into a parking lot or backyard party.” (Don’t laugh: Studio 54 was a cozy little jazz bar before Mick Jagger and Debbie Harry showed up one night with some records and a pound of blow.)

For civil libertarians who remember life before smart phones, meanwhile, the plan Google and Apple are working on to help governments control COVID-19 might as well be custom-designed to induce heebie-jeebies. The basic idea is that your phone’s operating system would reach out to other phones via Bluetooth and record the date, time, duration and location of the meeting. No personal information need be attached to those data points, just the identity of the device. When someone reports a COVID-19 diagnosis on an app, using a code provided by their public health department, devices that had been nearby would receive a warning that their owners might have been exposed, and should take such measures as local authorities advise.

It could be the stuff of dystopian sci-fi. You can just see the guy with the giant translucent computer screen shouting “magnify! Enhance!” Really, though, this comes down to a simple question: Whom do you least distrust? A co-production between Google, which is not at all known for respecting users’ privacy, and Apple, which at least seems to make an effort? Or governments?

April 16, 2020

Canada’s temporary foreign workers

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

Chris Selley points out some of the weirdness of Canada’s claimed dependence on temporary foreign workers because “Canadians still need to eat.”:

Temporary foreign workers picking fruit in a Canadian orchard.
Image from http://www.yorkfeed.com/apple-picking-urgently-canada/

If all goes as it should at Canada’s airports, temporary foreign workers will be informed of their responsibilities. They should be made aware of their employers’ responsibilities as well. And there’s no particular epidemiological reason to worry about them more than anyone else landing on a Canadian runway from abroad — or domestically, for that matter. The vast majority of temporary foreign workers are from Mexico, Jamaica or Guatemala, which have reported 39, 25 and nine COVID-19 cases per million residents. Canada’s tally works out to 713 per million.

But the official advice to employers provides little comfort. It doesn’t prohibit putting people up in shared accommodations; it merely says residents must be able to keep two metres from each other at all times. We know the limitations of such measures from experience in seniors’ homes and homeless shelters. It’s not necessarily “the state’s duty” to quarantine arriving temporary foreign workers, as Bloc Québécois leader Yves-François Blanchet argued this week. But the state could certainly do far more than it is.

For one thing, the cities in which workers typically first arrive are much better suited to proper self-isolation — i.e., in a hotel or motel room — compared to the farm country they are eventually headed for. Sourcing 45,000 hotel rooms is a huge job even in cities — that’s roughly how many rooms there are in the entire Greater Toronto Area — but it will never be easier than right now. It would prevent any bad-actor employers from breaking the rules. It would be much more reassuring than a government cheque for what works out to less than $80 per worker per day of isolation.

The whole situation is completely bizarre, though — one of several longstanding, bizarre and sometimes embarrassing Canadian situations that COVID-19 has highlighted. Economically speaking, the idea of temporary foreign workers essentially amounts to cheating. It reaches peak absurdity when businesses like Tim Hortons outlets claim to need them — that is, when they’re being brought in to do work that Canadians are demonstrably willing to do. It’s just a skeevy way to artificially depress wages and the price of fast food. People seemed to sense that back in 2014, when the government tightened the rules.

In agriculture, however, the idea seems thoroughly entrenched. Perhaps it’s a case of out of sight, out of mind. But it’s the same absurdity: If you can identify a group of 45,000 people without whose labour we literally wouldn’t be able to feed ourselves — or so we are told — then on what possible grounds are we denying them a path to Canadian citizenship? In 2017, the Toronto Star profiled a 66-year-old Saint Lucian man who had busted his hump on Canadian farms for 37 years in a row, with his paycheques deducted for income tax, EI and CPP, but who had no claim to stay. The highly skilled and educated immigrants we compete to attract bring many important things to Canada’s table; they don’t bring anything more important than food. And food is something COVID-19 has very much taught us not to take for granted. Who would have thought supermarket checkout clerks would achieve hero status?

April 15, 2020

“Experts” and their “models”

Filed under: Economics, Government, Politics, Technology — Tags: , , , — Nicholas @ 03:00

In the latest Libertarian Enterprise, after offering us his current favourite mixed drink recipe, L. Neil Smith gets around to discussing our modern dependence on “experts” wielding their intricate and convoluted computer models to guide our lives:

My preferred variant of Mott’s Clamato … I’ll have to try it with tequila as Neil suggests.

Start with a tall glass of Mott’s Clamato over ice. Many people can’t stand the idea of tomato juice enhanced with sweet clam juice (and some spices), and I won’t try to sell you on it, here. But if you relish it the way I do (I used to buy it by the gallon), then bon appetit! Throw in a healthy shot of tequila — mine is Cuervo Gold, but your mileage may vary. Add a fat slice of lime on the edge of the glass, a slice of lemon, and a slice of orange. The citrus really dresses it up. These are all ingredients I like very much, and together, they take the edge off a day I spent writing 1000 or 2000 words (my record so far is 3200) and let me relax.

At the end of that day, when my lovely and talented wife quits work and comes home — from the dining room, these days — we have a nice, comfortable cocktail hour (she drinks Cuba Libras) and watch Tucker Carlson. Ordinarily, three giant cans of the Budweiser concoction (which is also made with Clamato) will make me the tiniest bit silly. This drink, the Bloody Mermaid (ick) is surprisingly gentle and I have had two and a half so far without embarrassing myself. I love the taste of tequila neat (many don’t), and I would still be doing shooters, except that my loving bride of 36 years won’t let me eat that much salt.

Please enjoy this silly little drink if you can until we’re all free again.

Oh yeah — I couldn’t resist after all. There’s something I need to get off my chest. I’m sure you remember the way “experts” with computer models warned us all about Y2K, and the way it meant the end of Civilization-As-We-Knew-It. Then there was Global Warming — more experts, more computer models — there are still gullible morons out there who believe it’s not an obvious hoax. Now experts and their — increasingly failing — computer models are all telling us we are in the middle of the worst health crisis since the Black Death.

I happen to be, as you know, a lifelong libertarian and the most fervid advocate of the First Amendment that you will ever read. Therefore, I cannot endorse the suggestion I’ve heard that whenever an “expert” testifies about anything before any legislative body anywhere, and the words “computer model” come out of his mouth, the Sergeant-at-Arms should smash his face in, drag him out into the street, and shoot him him the back of the head. Perhaps millions of lives could be saved that way, but, as a lifelong libertarian and the most fervid advocate of the First Amendment you will ever read, I cannot endorse that position.

So drink up, my dear friends and readers and have the best time — under house arrest — that you possibly can!

When the Fed Does Too Much

Filed under: Economics, Government, History, USA — Tags: , , , , , — Nicholas @ 02:00

Marginal Revolution University
Published 22 Aug 2017

In the 2000s, the Fed kept interest rates low to stimulate aggregate demand. But the cheap credit also helped fuel the housing market bubbles. We’ll look at the case of the Great Recession as an example of where the Fed did too much in one area, and perhaps not enough in others.

April 14, 2020

QotD: The Edict of Diocletian, 301 AD

Filed under: Bureaucracy, Business, Economics, Europe, Government, History, Quotations — Tags: , , , , , — Nicholas @ 01:00

The most famous episode of price controls in Roman history was during the reign of Emperor Diocletian (A.D. 244-312). He assumed the throne in Rome in A.D. 284. Almost immediately, Diocletian began to undertake huge and financially expensive government spending projects.

There was a massive increase in the armed forces and military spending; a huge building project was started in the form of a planned new capital for the Roman Empire in Asia Minor (present-day Turkey) at the city of Nicomedia; he greatly expanded the Roman bureaucracy; and he instituted forced labor for completion of his public works projects.

[…]

Diocletian also instituted a tax-in-kind; that is, the Roman government would not accept its own worthless, debased money as payment for taxes owed. Since the Roman taxpayers had to meet their tax bills in actual goods, this immobilized the entire population. Many were now bound to the land or a given occupation, so as to assure that they had produced the products that the government demanded as due it at tax collection time. An increasingly rigid economic structure, therefore, was imposed on the whole Roman economy.

But the worst was still to come. In A.D. 301, the famous Edict of Diocletian was passed. The Emperor fixed the prices of grain, beef, eggs, clothing, and other articles sold on the market. He also fixed the wages of those employed in the production of these goods. The penalty imposed for violation of these price and wage controls, that is, for any one caught selling any of these goods at higher than prescribed prices and wages, was death.

Realizing that once these controls were announced, many farmers and manufacturers would lose all incentive to bring their commodities to market at prices set far below what the traders would consider fair market values, Diocletian also prescribed in the Edict that all those who were found to be “hoarding” goods off the market would be severely punished; their goods would be confiscated and they would be put to death.

In the Greek parts of the Roman Empire, archeologists have found the price tables listing the government-mandated prices. They list over 1,000 individual prices and wages set by the law and what the permitted price and wage was to be for each of the commodities, goods, and labor services.

A Roman of this period named Lactanius wrote during this time that Diocletian “… then set himself to regulate the prices of all vendible things. There was much blood shed upon very slight and trifling accounts; and the people brought no more provisions to market, since they could not get a reasonable price for them and this increased the dearth [the scarcity] so much, that at last after many had died by it, the law was set aside.”

Richard M. Ebeling, “How Roman Central Planners Destroyed Their Economy”, Foundation for Economic Education, 2016-10-05.

April 13, 2020

James J. Hill, US railroading’s premier “market entrepreneur”

Filed under: Business, Government, History, Railways, USA — Tags: , , , — Nicholas @ 03:00

Dane Stuhlsatz outlines the story of US federal government subsidies and other interventions into the 19th century railroad industry and the one tycoon who avoided the lure:

Postcard photo of the Great Northern Railway’s “Empire Builder” streamliner between Everett and Seattle, Washington, circa 1963.
Great Northern Railway postcard via Wikimedia Commons.

Burton W. Folsom, Jr. outlined this story in his book, The Myth of the Robber Barons, identifying two models of entrepreneurship; the “political entrepreneurism” of lines like the Union Pacific and Central Pacific versus the “market entrepreneurism” of James J. Hill and his Great Northern Railway.

Canadian-born James J. Hill (1838-1916) in 1914.
Photo from Famous Living Americans, edited by Mary Griffin Webb and Edna Lenore Webb via Wikimedia Commons.

As Folsom details, the former chased government largesse, ultimately in exchange for loss of control of their business, while the latter chased profits through prudent business decisions. Hill’s success juxtaposed with UP’s and CP’s failure is due in no small part to his steadfast refusal to accept any federal subsidies. In short, UP’s and CP’s government subsidized incentives were vastly different from Hill’s profit driven incentives, which lead to vastly different outcomes.

Federal subsidies incentivized speed, not efficiency. The subsidies were paid in the form of both land grants and direct payments. For each mile of track laid, the UP and CP would receive 20 acres of land and either $16,000 (for track on flat land), $32,000 (for track on hilly terrain), or $48,000 (on mountainous terrain). This incentive for speed resulted in winding, inefficient, routes built with inferior materials, ultimately culminating in a federal price tag of 44,000,000 acres and $61,000,000 (astronomical sums in the 1860s-70s). Despite all this federal assistance, shortly after the golden spike was driven on May 10, 1869 at Promontory Summit, Utah, the UP and CP were nearly bankrupt and required further assistance to stay afloat.

The lines which were born and brought up on federal aid needed federal aid to continue. This led to the passage of the Thurman Law in 1874 which forced UP to pay 25% of its earnings a year to pay its federal debt.

UP’s profitability decisions were also subject to government approval. Branch lines — smaller lines off the main line into rural communities — which could have helped UP’s bottom line, were often not approved by federal bureaucrats. Additionally, the federal Bureau of Railroad Accounts required constant checking of UP’s books. All these measures stifled the ingenuity that UP so desperately needed to make its line profitable. UP quickly found out that the power to subsidize was the power to destroy.

Hill’s line on the other hand was methodically surveyed and built, on the shortest routes possible, with the least gradient possible, and using the best steel and other materials on the market at the time. Rather than political largess, Hill made his decisions based on profit and loss. But, for all the efficiency that Hill built into his line — he was able to transport across the country faster, cheaper, and with less maintenance costs than could the UP and CP — arguably the most important aspect for the viability of his business was the freedom to conduct business untethered by the strings that accompanied government subsidies.

While Hill was free to build when and where he wanted so long as he reached voluntary agreements with landowners, consumers, and employees, UP was tied up in red tape. As Hill’s line grew evermore profitable and reliable for customers, the UP and CP struggled along on federal aid, until they ultimately went bankrupt in 1893.

For his part, Hill’s line was the only transcontinental railroad to never go bankrupt.

Route map from the Great Northern Railway, circa 1920. Red lines are the GN route; dotted lines are other railroads. Created from the Map Maker at nationalatlas.gov and routes drawn in, using a 1920 map as a reference.
Map by Elkman via Wikimedia Commons.

April 12, 2020

Minimum alcohol pricing – a policy so good you have to lie about it

Filed under: Britain, Economics, Government, Health, Wine — Tags: , , , , , — Nicholas @ 05:00

Scotland has had legal minimum prices for alcoholic beverages since mid-2018. If you read a random selection of mainstream media coverage, you’d know that it’s been a huge success, with vastly improved public health results at a price to consumers measured in mere pennies. As with all propaganda efforts, if you tell the lies often enough, people may believe you:

There has been all sorts of rubbish written about minimum pricing since it was introduced in Scotland in May 2018. Nicola Sturgeon has lied about in the Scottish Parliament. The BBC has gone to extraordinary lengths to spin the policy as a success. The public have been told that alcohol-related hospital admissions have gone down when they have gone up. We have seen the media fall for blatant cherry-picking. We have been told that rates of problem drinking have gone down when we don’t have any evidence either way.

One of the few solid facts — that there were more alcohol-related deaths recorded in Scotland in 2018 than in 2017 — has been sidelined. Instead, the media have focused on a disputed, and relatively small, decline in alcohol sales as if that were an end in itself. Any port in a storm (fortified wine sales have definitely benefited from minimum pricing).

Figures from the calendar year of 2018 are of limited use because minimum pricing didn’t begin until May 1st. Today, for the first time, I can reveal the monthly mortality figures for Scotland, England and Wales. They show that there was no difference between the change in annual death rates from alcohol-related causes, regardless of whether the country had minimum pricing in place. Both England/Wales and Scotland saw a decline between May and December of seven per cent (compared to the previous year).

This graph is published in a new briefing paper I have written for the IEA. It summarises all the evidence gathered to date on deaths, hospitalisations and sales, plus exclusive new data.

Importantly, it contains estimates of the costs to consumers. Among the more outlandish claims made by the Sheffield modellers was the idea that moderate and low income consumers would be barely affected by minimum pricing. They predicted that a low income moderate drinker would only pay an extra 4p a year! This was never realistic, not least because it was based on the minimum price being set at 45p and they defined a moderate drinker as someone consuming the equivalent of just two pints of lager a week, but it worked from a PR perspective because it quelled politicians’ fears about the policy being regressive.

QotD: The Gini coefficient

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

At least for now, most progressives acknowledge that markets and economic growth are necessary. But progressives in academia contend that growth has proved itself secondary to equality efforts — something to be exploited, rather than appreciated. Not just nationally, but worldwide, policymakers and the press regard the subordination of growth to equality to be a benign practice, as in the recent line in the Indian periodical Mint: a policy aimed at “reducing inequality need not hurt growth.”

The redistributionist impulse has brought to the fore metrics such as the Gini coefficient, named after the ur-redistributor, Corrado Gini, an Italian social scientist who developed an early statistical measure of income distribution a century ago. A society where a single plutocrat earns all the income ranks a pure “1” on the Gini scale; one in which all earnings are perfectly equally distributed, the old Scandinavian ideal, scores a “0” by the Gini test. The Gini Index has been renamed or updated numerous times, but the principle remains the same. Income distribution and redistribution seem so crucial to progressives that French economist Thomas Piketty built an international bestseller around it, the wildly lauded Capital.

Through Gini’s lens, we now rank past eras. Decades in which policy endeavored or managed to even out and equalize earnings — the 1930s under Franklin Roosevelt, the 1960s under Lyndon Johnson — score high. Decades where policymakers focused on growth before equality, such as the 1920s, fare poorly. Decades about which social-justice advocates aren’t sure what to say — the 1970s, say — simply drop from the discussion. In the same hierarchy, federal debt moves down as a concern because austerity to reduce debt could hinder redistribution. Lately, advocates of economically progressive history have made taking any position other than theirs a dangerous practice. Academic culture longs to topple the idols of markets, just as it longs to topple statutes of Robert E. Lee.

But progressives have their metrics wrong and their story backward. The geeky Gini metric fails to capture the American economic dynamic: in our country, innovative bursts lead to great wealth, which then moves to the rest of the population. Equality campaigns don’t lead automatically to prosperity; instead, prosperity leads to a higher standard of living and, eventually, in democracies, to greater equality. The late Simon Kuznets, who posited that societies that grow economically eventually become more equal, was right: growth cannot be assumed. Prioritizing equality over markets and growth hurts markets and growth and, most important, the low earners for whom social-justice advocates claim to fight. Government debt matters as well. Those who ring the equality theme so loudly deprive their own constituents, whose goals are usually much more concrete: educational opportunity, homes, better electronics, and, most of all, jobs. Translated into policy, the equality impulse takes our future hostage.

Amity Shlaes, “Growth, Not Equality”, City Journal, 2018-01-21.

April 6, 2020

The Precautionary Principle – “If it saves only one life…”

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

A guest post at Catallaxy Files on the madness of taking the Precautionary Principle as your guide:

Slide from a presentation by Patti Gettinger, 2011-07-11.
Original slideshow at https://fr.slideshare.net/regsgridlock/the-precautionary-principle-8656034

In the unprecedented trampling of rights characterised by the response to the global pandemic of COVID-19, the common justification is that it will save lives, as though no measure is too great to save even one life.

This has echoes of the Precautionary Principle, which has pushed aside ubiquitous risk management principles in such areas as climate change, invariably to justify unlimited spending which risk management principles would otherwise limit. In other words, it’s a principle which can be used to justify any measure. And here we are.

One fundamental difference between the competing principles is the concept of marginal benefit, which, simply put, is the point where the benefits of an action no longer outweighs the cost. Our new “rules” from the newly formed National Cabinet, of which no legal or constitutional standing exists, has far surpassed the point of marginal benefit.

A person fishing off the coast alone in a small boat is in breach of the rules, as is a person playing golf alone, or a person sunbathing on a rock in the outback, yet in none of these examples can any measurable likelihood of spreading it or catching the disease be identified. These situations would fail any risk management approach, but not the Precautionary principle. Any risk, that is, any potential risk that can not be confidently identified as absolute zero, is a risk not worth taking, but that is not how we live our lives, because we understand that everything involves risk. Driving a car, catching public transport, having a job, not having a job, leaving your house or indeed staying in it involves some level of risk.

Also central to risk management is the concept of mitigation; the potential actions that can reduce, transfer or eliminate identified risks. In the case of COVID-19, many mitigation measures have been identified, and implemented. Such mitigations implemented are travel bans (belatedly), banning large crowds (belatedly), temperature screenings, washing hands, social distancing, pandemic announcements (belatedly, again), face masks (very belatedly), and fit-for-purpose hospitals (you guessed it). All of these easily demonstrate a benefit greater than worst-case scenario costs, yet after being bystanders for weeks, leaders across the globe then overreacted far beyond the demonstrable benefits. At least benefits to us.

April 5, 2020

Ontario premier Doug Ford surprises many observers – “Wasn’t this guy supposed to be Canada’s Donald Trump?”

Filed under: Cancon, Government, Media, Politics — Tags: , , , , , — Nicholas @ 03:00

Chris Selley on the surprisingly solid performance of Ontario premier Doug Ford during the Wuhan Coronavirus epidemic response:

Ontario premier Doug Ford as new Progressive Conservative leader at the 2014 Good Friday procession in East York, Canada.
Photo via Wikimedia.

The premier has attracted much praise for his performance during this crisis, and it is deserved. His last misstep was advising families to head off on March Break as planned, viruses be damned, but that might as well have been 100 years ago. We were all clutching at optimism. Former premier Kathleen Wynne, who clearly understands Ford, graciously said she heard a man “trying to calm the waters … out of the goodness of his heart.”

Since then Ford has struck the right tone: often visibly alarmed, but calm, scripted and plain of speech. He has been gracious to everyone on the right side of the fight, from doctors and nurses to supermarket clerks and frantic, unemployed people stuck at home, to Prime Minister Justin Trudeau, to his fellow premiers of all political stripes, and even to journalists. And he has been galvanizingly withering to those on the wrong side, most notably a few price-gouging businesses who have been helpful enough to offer themselves up as common enemies.

More than a few people have remarked: “Wasn’t this guy supposed to be Canada’s Donald Trump?”

Indeed, once upon a time, those comparisons flew thick and fast. But they were always absurd — a toxic by-product of the Canadian media’s mortifying obsession with all things American. No First World politician is remotely like Donald Trump. I have filed many thousands of words over the past decade on what I view as Doug Ford’s inadequacies as a politician, and it would never have occurred to me to compare him to such a transparently awful president.

Ford, too, has levelled many vastly over-the-top accusations against his opponents. But he has basically set them all aside now. While federal Conservatives continue battling federal Liberals on the carbon tax file, Ford has refused to discuss it and happily applauds the feds’ anti-coronavirus efforts. Where once Ford railed at his media critics, now he praises their efforts covering the crisis and informing Ontarians. His relatively plain talk is noticeably more reassuring than the messaging some other Canadian heads of government, who fancy themselves far more polished, are dishing out — Trudeau in particular.

April 4, 2020

The media’s grasp of modern logistics

Filed under: Business, Economics, Government, Media — Tags: , , , , , , — Nicholas @ 05:00

Kurt Schlicter — who, spoiler, isn’t a fan of our news media in general — on the demands by newsbeings for the impossible to be done immediately:

We Americans are truly blessed by having a mainstream media full of brilliant renaissance men, women, and gender non-specific entities who are masters of so many varied and intermittently useful skills and who are eager to share their knowledge with us benighted souls. The pandemic has revealed that every urban Twitter blue check scribbler, MSNBCNN panelist, NYT/WaPo doofus, and barely legal “senior editor” of a website you never heard of, is a Nobel Prize-winning epidemiologist, a master logistician, and a diversity consultant to boot.

[…]

Another hitherto unknown skill that the media believes it possesses is logistics. “Why hasn’t Trump commanded a million ventilators to appear?!” the reporters demand. It’s pretty easy to see where they might have gotten the idea that the moment one articulates a desire to possess something that it magically appears. Capitalism has pretty much made that a reality. If you want something, you can go to a store and get it 24/7, or you can go on Amazon and it’ll be at your Manhattan apartment in 48 hours. Since they have never built anything or transported anything or distributed anything, only benefited from the labor of the unhip people who do those things, it’s only natural that the delayed adolescents who make up our media class imagine that material goods can be simply wished into being. After all, for all practical purposes during normal times, because of the efforts of Americans they look down upon, material goods pretty much can be simply wished into being. But prosperity takes work, not that the media would know.

[…]

Apparently, the media class thinks there are giant warehouses with an endless supply of goods just sitting there, somewhere, waiting. They have no idea about how logistics work, how goods flow quickly from producer to market and how expected resupply levels need a few days to adjust from a 10 percent daily turnover to a 30 percent daily turnover. They have zero appreciation for inventory management because no one they know does unglamorous stuff like that.

It’s all much easier in a socialist command economy. You get nothing and like it. Or don’t like it. Whatever. Here’s your weekly bean allowance. Workers of the world unite. You have nothing to lose but access to toothpaste and toilet paper.

The best part is when the media – the same media that was collectively soiling its Dockers because that mean old Trump was barring direct flights from China because of racism and stuff – demands to know why, back in December, Trump was not commanding a zillion Wuhan Flu tests, a zillion masks, and a zillion ventilators be created, while locking down all of America. Leaving aside the whole lack of an enumerated power to do that thing, in what world would have Trump have convinced anyone – least of all the media that was slobbering over his bogus impeachment at the time – that some bat soup-derived pathogen in BumFoo, China, was going to black swan all over America’s economy? The lack of seriousness by the people who presume to be reporting the news to us is more breathtaking than the damn ChiCom grippe.

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