I managed to talk for more than 15 minutes, but I could have boiled my remarks down to these two points.
- Small government is the best way to achieve competent and effective government. Coolidge and his team were able to monitor government and run it efficiently because the federal budget consumed only about 5 percent of GDP. But when the federal budget is 23 percent of GDP, by contrast, it’s much more difficult to keep tabs on what’s happening – particularly when the federal government operates more than 1,000 programs. Even well-intentioned bureaucrats and politicians are unlikely to do a good job, […]
- Higher tax rates don’t automatically lead to more tax revenue. Coolidge and his Treasury Secretary practiced something called “scientific taxation,” but it’s easier just to call it common sense. Since Amity’s book covered the data from the 1920s, I shared with the audience some amazing data from the 1980s showing that lower tax rates on the “rich” led to big revenue increases.
Dan Mitchell, “Two Lessons from Calvin Coolidge”, International Liberty, 2013-05-26
May 27, 2013
QotD: Two lessons from Calvin Coolidge
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May 26, 2013
More on Scotland’s proposed “child protection” scheme
Last week, I linked to a story about the Scottish government introducing a new “child protection” program that would assign a “named person” as guardian for every child. Christopher Booker has more on this rather disturbing Big Brother initiative:
We are familiar with the idea that state employees are expected to take an interest in a child’s welfare, from health visitors to teachers at school. But this proposal that local authorities should be empowered to appoint an official to act as a personal “guardian”, or social worker, to oversee every aspect of a child’s life from birth onwards is a world first.
In fact, the Bill is remarkably vague about the powers to be given to these “named persons”. Will they be free to arrive unannounced at the family home to check on how a child is being treated by its parents, when it goes to bed, what food it is given, what political or religious opinions it is being brought up with? In other words, the Bill gives no idea of how this hugely ambitious scheme, estimated to cost Scotland’s local authorities up to £138 million a year, will work in practice. And most worrying of all, to anyone familiar with the failings of our existing “child protection” system, is how often the most damaging errors can arise when professionals are charged with reporting to social workers their suspicion that something in a child’s life might be amiss.
In too many of the cases I have followed where children have been removed from their families for what seems to be no good reason, their nightmare began with a report by a teacher or a doctor that got some overheard remark or slight injury absurdly out of proportion. Too often, such suspicions then harden into allegations that are never properly tested against the evidence, and the damage is done. However admirable, in theory, the thought of appointing a “guardian” to watch over every child might seem, experience suggests that, in practice, this may exacerbate those weaknesses in our existing “child protection” system, which make a mockery of the noble aims it was set up to promote.
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May 24, 2013
Is this Stephen Harper’s tipping point?
Paul Wells talks about the terrible week Stephen Harper has had:
A government is like a shark. If it stops swimming, it drowns. Harper has lasted 11 years as a party leader for two reasons: He was never alone and he had a plan. Indeed, it’s the plan that has often helped keep him from being alone, because his are a loner’s instincts. He reached out to the Progressive Conservatives in 2003 after battling them for 16 years because he knew his Canadian Alliance was too slim a platform for a man who aspired to govern. He made serious concessions to Quebec nationalism after mistrusting it all his life. After he united the Conservative party, he reached outside its bounds to attract Liberal MPs — David Emerson, Wajid Khan — and then, through Jason Kenney’s ethnic-outreach efforts, he took away an ever-growing bite of the Liberal voter base.
At every moment, he could afford such bold moves because he was secure in his leadership of the Canadian conservative movement. Harper’s critics tend to describe him as a loner, a brain in a jar created by mad scientists toiling in underground laboratories at the University of Calgary. But in fact he has expressed a broad cultural conservatism in the land. Millions of Canadians have been happy he is their Prime Minister. Knowing he had a base, he could build beyond it through decisive action.
And now? He is increasingly alone and isolated. Look across the country, across the border, around the world, and even within his own caucus.
[. . .]
In private conversations with reporters, Conservatives were calling for Harper to provide far more detail about the Duffy-Wright deal than he did on Tuesday. He let them down, as he has often done in this drama. Duffy was Harper’s choice for Senate. Wright was Harper’s chief of staff, working under Harper’s nose. When their plot was revealed, Harper’s response was to make a great show of reminding his MPs to keep their own noses clean. It’s like a neighbourhood kid who sends a baseball through your living-room window and then comes over to lecture you on your clumsiness.
All of this would matter less — to Conservatives, to the country — if it felt like a distraction from an “active and important agenda.” Of course, some of this government’s activity is well-known and broadly popular among Conservatives. Since the 2011 election, Harper has shut down the Health Council of Canada, the National Council of Welfare, the National Round Table on the Environment and the Economy, Rights and Democracy, the First Nations Statistical Institute and the National Council of Visible Minorities. The Millennium Scholarship Foundation, the Council for Canadian Unity and the Canadian Council on Learning were shut down a little earlier. The end of the mandatory long-form census was only the beginning of sharp cuts at Statistics Canada.
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May 21, 2013
Apple and the question of profit shifting
Tim Worstall explains why both Apple and the Senate Permanent Subcommittee on Investigations can both be correct on the question of profit shifting — because the term’s meaning isn’t consistent:
Apple divides itself, roughly speaking, into two segments. The Americas and everywhere else (not that unusual for a US company, actually). Apple’s point is that it makes profits in the US selling things to people in the US. All profits from doing this pay the full US corporate income tax minus the usual deductions and allowances that every company can take advantage of.
Apple also points out that it makes the majority of its profits selling things outside the US to people who are not Americans. The iPhones are made in China and sold in Europe, just as one example. These profits are made outside the US: and Apple does not bring them into the US. Thus such profits are not liable to US corporate taxation (it is more complex than this but that’s the gist of it).
However, the Senate doesn’t use that commonsense definition of the phrase:
The Subcommittee is agreeing that these are profits made in foreign countries. Profits made by buying something in China and selling it outside the US. These profits are then not repatriated to the US. This is then deemed to be profit shifting.
It’s worth noting what everyone does agree upon.
Apple makes large profits in the US. These pay full US corporate income tax.
Apple makes large profits outside the US. These are kept outside the US and do not pay US corporate income tax.
And so the question becomes, what is the definition of profit shifting? If we take Apple’s definition, that they do not move profits out of the US, then they’re not profit shifting. If we take the Subcommittee meaning then they are. For without the corporate structures that Apple has put in place then those foreign profits would be subject to the US corporate income tax (minus, of course, the foreign taxes already paid).
Update:
The company that built the iDevices you love so much MUST BE PUNISHED because that’s what government is all about, my children.
— etherbrian (@etherbrian) May 21, 2013
Update, the second: The Register‘s report on the Irish side of the “profit shifting” story:
Irish deputy PM: You want more tax from Apple? Your problem, not ours
Póg mo thóin, you crazy Yanks
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May 19, 2013
Stephen Harper’s chief of staff submits his resignation
Maclean’s covers the morning’s breaking news from Ottawa:
The prime minister’s chief of staff announced his resignation early Sunday, saying he left his post in light of the controversy around his personal handling of Sen. Mike Duffy’s expense payments.
Nigel Wright stepped down after a phone conversation with Stephen Harper, signalling a recognition that he — and not Duffy’s improper expense claims — had become the story.
Ray Novak, who has been by Harper’s side since 2001, will be the prime minister’s new chief of staff. Novak is thought to represent stability and is well known by all the federal ministers.
The Prime Minister’s Office said earlier this week that Wright personally paid off $90,000 in inappropriately claimed housing expenses for Duffy, prompting critics to complain that the bailout violated ethics rules that prohibit senators from accepting gifts.
I’m surprised it took this long for Wright to resign … I’d expected him to fall on his sword the day after it was revealed that he’d paid Duffy’s expenses with a personal cheque.
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Scottish government assigns state guardians to all children
The SNP has introduced brand new form of interference in the lives of Scottish families:
Under the “scary” legislation, known as Getting It Right For Every Child or GIRFEC, every child aged under 18 will have a ‘Named Person’ with the legal right to ensure they are raised in a government-approved manner.
It will also mean that sensitve personal details about every child — even down to the names of their pets — can be recorded, stored and shared on a central database.
Incredibly, GIRFEC has already been adopted by almost every local authority in Scotland and yet most people — including some MSPs — have no idea of the full extent of its Big Brother-style interference.
[. . .]
For children under five, the state guardian will usually be a health visitor, while for school-age children it will usually be the headteacher or deputy head.
They will have to record “routine information” about their charges, which is then stored in a vast database, and can raise concerns about a child’s wellbeing that could ultimately result in them being taken into care.
Marion Samson, headteacher at Westquarter Primary and Nursery in Falkirk, is a ‘Named Person’ who says her role is to “challenge” families who are not bringing up their children properly.
However, in response to her profile on the government’s Engage for Education blog, one teacher – giving her name as Sian Dawson — described GIRFEC as “quite a scary notion”.
She wrote: “Perhaps the Scottish Government would be far better tightening up the processes surrounding child protection for those who actually need help rather than not trusting the majority of families to do a good job.”
According to a Scottish Government training document seen by this newspaper, the specific aim of GIRFEC is to undermine parents and give the “community” a greater role in raising children.
May 18, 2013
The micro-state of Sealand
Thomas Hodgkinson reports on his week-long visit to the tiny nation of Sealand:
Seven miles off the coast of Suffolk, there is a country. It isn’t a very big country. In fact, its surface area extends to no more than 6,000 square feet, which is about twice the size of a tennis court. You won’t find it on Google Maps and it isn’t a member of Nato or, indeed, the EU. But it exists. And I know, because I’ve been there.
[. . .]
The reason for this suspicion of strangers in general lies in the violent, picaresque nature of its past. Sealand was built in 1943 by the Royal Navy as an anti-aircraft fortress designed to shoot down Luftwaffe planes. In those days it was equipped with two 94mm Vickers heavy anti-aircraft guns and two 40mm Bofors light anti-aircraft guns, and manned by 120 seamen crammed into accommodation in the hollow concrete towers. It was known as HM Fort Roughs, or Roughs Tower for short. Abandoned after the War, it gathered rust and guano, a gloomy relic of conflict, until the era of pirate radio in the 1960s.
Then two rival entrepreneurs competed for possession, regarding the fort as the perfect place (since it was outside the three-mile zone that then constituted British territorial waters) from which to broadcast pop music to a grateful generation of teenagers. The piratical pair were the long-haired Irish chancer Ronan O’Rahilly, of Radio Caroline fame, and one Roy Bates, a cravat-wearing former Army major.
Each time one of them put men on Roughs Tower, the other would send people to eject them, sometimes forcibly. It was a question of who was prepared to go further, and the answer turned out to be the Englishman. For Bates, the solitary fortress became far more than a radio project. It became an obsession that would absorb not only his life, but also the lives of his wife and children.
The key thing, he knew, was to maintain a presence. With even one occupant, Roughs Tower was tough to take. But Roy couldn’t afford a guard, so instead he plucked his 14-year-old son Michael out of school and put him up there, sometimes with his daughter Penny, sometimes with his wife Joan. For Michael, this was a welcome escape from the dreary rigours of a public-school education, but as he confided to me during a long lunch on-shore after my visit, “I expected it to last six months, not 40-something years”.
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May 17, 2013
Rob Ford already immortalized in Taiwanese news animation
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May 16, 2013
The causes of the “Great Recession” by Tyler Cowen
According to Professor Tyler Cowen, the Great Recession was caused by a number of different factors. Cowen outlines 4 distinct and complicated problems which led to the downturn:
• A drop in the aggregate demand (http://en.wikipedia.org/wiki/Aggregat…)
• A “horribly” performing banking sector
• Problems with monetary policy
• An increase in the “risk premium” (http://en.wikipedia.org/wiki/Risk_pre…)Prof. Cowen explains why one economic model isn’t sufficient to explain the economic downturn. He shows how several different economic models can be used to explain both the cause and the effects of the recession.
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May 14, 2013
May 13, 2013
Ontario’s other quasi-monopoly, The Beer Store
Anthony Matijas discusses the privately owned organization that controls the majority of beer sales in Ontario:
The Beer Store’s employees will not be going on strike because they are not public sector employees. That may seem obvious to some, but according to an independent survey cited by a government report, 60% of people in Ontario believe The Beer Store to be a state-run entity. No doubt they benefit from the confusion, which may placate customers wondering why they pay so much more for beer than districts such as Quebec and New York state, where beer is sold in corner stores. The Beer Store fosters this ambiguity by designing their stores to be about as welcoming as a Service Ontario outlet.
In fact, the retailer is co-owned by three of Canada’s largest brewers, Molson, Labatt’s, and Sleeman, none of which are entirely Canadian companies. Molson merged with Coors of Denver in 2005, Labatt’s is owned by Anheuser-Busch InBev of Belgium, and Sleeman is owned by Sapporo of Japan. Aside from the LCBO, which enjoys a far more modest market share and generally does not supply restaurants and bars — and microbreweries, which are allowed to sell retail beer only on premises — The Beer Store maintains a government-protected monopoly.
[. . .]
Meanwhile, brewers who aren’t part of the beer cartel must pay what they describe as exorbitant listing prices to have their products placed in Beer Store locations and, once they do, their visibility is generally limited to a coaster-sized listing on the wall, often nowhere near eye-level. Anyone who doesn’t live next door to a Beer Store is likely to pass several billboards for multinational swill on the way and, not frequenting an LCBO, one may not be aware of the many local craft beers available. Those who are near-sighted, and have forgotten their corrective eyewear, may just end up walking out of there with a two-four of Coors Light and a sad look in their eyes.
Revoking Beer Store exceptionalism should be a matter all Ontarians could agree upon, regardless of ideology. A state sponsored monopoly defies the free-market principles of conservatives, while special privileges for multinational corporations should not sit well with supporters of either one of the left-of-centre parties. Furthermore, the largely foreign ownership of Canada’s big breweries means that The Beer Store in no way compliments the economic nationalist tendencies of the NDP.
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May 9, 2013
Let ’em strike!
We’re in the final week before the LCBO is threatening a strike. Michael Pinkus suggests we should let ’em walk:
For the third time in a decade the LCBO is holding Ontario hostage — and just like they did in 2005 and 2009 when the threat of a strike was on the table, they’ll be an 11th hour (more like on the 11th hour and 59 minute mark) resolution where the LCBO employees get everything they want because the province does not want to lose the revenue the LCBO brings into the province. Screw the teachers, they take money out of the system, but the LCBO brings it in, so they should get whatever they ask for, right? It’s the approach taken by every government who has “stared down” the LCBO, and lost. Not that I’m necessarily for the teachers, but if it’s a choice between educating our youth or feeding our appetite for liquor I know which side I fall on … and so would any right minded Ontarian — it’s the booze that wins out every time.
And just like in 2005 and 2009 the LCBO will make a ton of money in the days before the “strike”. It’ll be a feeding frenzy of mammoth proportions in the aisles, right up to the last hour. Shelves will be decimated as people stock up for what surely will be touted as long, drawn out labour strife … that’ll never come. And why do I say that? Because any right thinking Ontarian knows that if the LCBO goes on strike it means more than loss of revenue to the province, or an inability to get out of country booze … it means the end of the LCBO (and everyone involved knows that).
Take a peak around us privatization is today’s buzz-word and it’s all around us. In our own country, to the south, in Europe — at corner stores, in supermarkets and in specialty stores … heck even Pennsylvania is getting into the act of loosening their liquor laws (and nobody thought that day would come) — but not here in NO-FUN-Tario, a have not province … we sit under the rules and thumb of the Liquor Control Board. If they go on strike questions will be raised as to why we have a provincially run system, why we support unionized workers, or why we can’t be more liberal with our booze (plus you just know some idiot will want to declare it an essential service). So it does not behoove the LCBO to walk off the job and the government won’t allow it because they’ll be tough questions to answer. So don’t go betting the farm on a labour dispute and seeing picket sign toting employees at the local Board store — this one will end like all the others, with the LCBO threatening to walk out, a mass throng of buyers the day before, and the sun rising to a new dawn the next day with a new deal for LCBO employees … and all will be right in Ontario for another 4 years … when we’ll do it all again.
Update: A report in the Toronto Star claims that Ontario could earn a $1 billion windfall by allowing private liquor stores into the province:
“If the Ontario liquor industry mirrored ours in B.C., instead of $1.6 billion going to government, that number could be around $2.7 billion,” he states in his 15-page speech, which highlights the pluses for locally produced wines, beers and spirits.
With 635 stores and 219 convenience store locations in rural and northern Ontario, the LCBO last year reported net sales of $4.71 billion — up $218 million — and handed over to the Ontario treasury an all-time high of $1.63 billion, not including taxes.
“If Ontario allowed private liquor stores, consumers would have access to hundreds of new VQA wines, craft beers and spirits.”
His comments come at a time when the LCBO plans to spend $100 million on expansion, including express outlets in 10 large grocery stores and expanded VQA sales, and while Tory Leader Tim Hudak calls for the booze monopoly to be privatized and for beer and wine to be sold in corner stores.
“A bit of competition makes the world go round . . . I think now that we are (in) 2013 it’s time for some change,” Hudak told reporters at Queen’s Park.
B.C. has had a mix of private and public liquor stores “to create better choices for producers to sell and for consumers to buy,” Baillie said.
Ontario currently does allow a tiny number of private wine stores to operate, but under incredibly restrictive conditions. For one thing, they’re only allowed to be located in areas the LCBO has determined are “underserved”, they may only sell wine from a single winery or winery group, and the number of stores is limited to the licenses that were granted to certain wineries before 1993.
Oh, and the kicker to all those restriction? If you manage to put in a store in an “underserved” area and make a profit? The LCBO can then turn around and re-designate your area to invalidate your license or place one of their own stores in the area and take away the business you’ve built up. Catch-22.
