Quotulatiousness

January 14, 2013

Insufficient bribes and transport aircraft

Filed under: Government, Italy, Military — Tags: , , — Nicholas @ 09:35

Strategy Page on the sad-but-predictable situation in Afghanistan:

Afghanistan recently announced that it would cancel the contract to buy and use 20 C-27A transports. The official reason was the inability of the Italian maintenance firm to keep the aircraft operational. The unofficial reason is the unwillingness of the Italians to pay as much in bribes as the Afghan commanders were demanding. Over half a billion dollars was being spent on buying and operating these aircraft and all the money was coming from the United States. Afghan government and air force officials were determined to grab as much of that cash as possible. That meant there was not enough money for the spare parts and tools needed to keep the C-27As flying. The Afghans can be self-destructive in so many ways, and letting these transports get away because not enough could be stolen from the contracts was another example of this.

More self-destructive behavior is expected. The Western donor nations are getting fed up with the increasingly aggressive Afghan corruption. Last year, as the Afghans asked for more military aid, the donor nations instead cut contributions. The Afghans were told that the aid would be reduced from $11 billion a year to $4.1 billion a year between 2012 and 2017. That would only change if, by some miracle, the Afghans managed to get their thieving ways under control. Currently, the Afghans will go to great lengths to get around donor auditors and anti-corruption measures. The C-27A was a case of everyone just giving up. Expect to see more cases like this.

January 13, 2013

Calling it a “debt ceiling” is misleading: it’s actually a “debt sky”

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 12:40

In Reason, Sheldon Richman explains the absurdity of allowing governments to go this deeply into debt:

The last time the debt-ceiling controversy arose, it occurred to me that if the raising the “ceiling” is a mere formality — if in fact the sky’s the limit to government borrowing — it’s no ceiling at all. Hence, I dubbed this charade the “debt sky.”

Those who favor automatic increases in the “limit” — or no limit at all — give the game away when they argue that the borrowing authority must be increased because the full faith and credit of the United States is on the line. After all, they say, the money is needed to pay bills already incurred, not for new spending. Obama makes this claim routinely, as though the case for raising the limit is open and shut.

Who knows if that is true? But if it is, think about what it means. Congress has been incurring bills the payment of which depends on a future increase in the debt limit that theoretically could be rejected. It’s bad enough that Congress can incur financial obligations under the statutory authority to borrow; it’s intolerable that Congress can incur financial obligations based on a possible but not certain future expansion of its authority to borrow. This is truly government run amok.

You and I can’t force banks to raise our credit-card limits merely because we have bills to pay. Why should Congress be able to do the equivalent? The road to fiscal responsibility would begin with an end to this practice. Better yet, no more raising of the debt limit — cut spending and live within the current limit. And even better: No more borrowing. Government borrowing is a source of many evils, not least of which is that for decades it made big government appear cheaper than it is. Could the federal government spend nearly $4 trillion a year if it had to raise every penny through taxation? Unlikely. A tax revolt would have been ignited. But let the government borrow a trillion dollars a year, more than 40 cents of every dollar spent, and government looks relatively inexpensive — or it did before things got so out of hand that everyone could see the looming danger.

January 11, 2013

Public choice theory is neither Left nor Right

Filed under: Bureaucracy, Economics, Government — Tags: , , , , — Nicholas @ 00:01

In his obituary for the late James Buchanan, Radley Balko debunks the meme that public choice theory — of which Buchanan was one of the founding fathers — is by nature anti-left:

The discrepancy struck me at the time, and has stuck with me ever since. Buchanan’s work is often seen on the right as a critique of the left’s faith in public service. He showed that like everyone else, public servants tend to serve their own interests, not necessarily the interests of the greater public good. When a new federal agency is created to address some social ill, for example, there’s a strong incentive for the employees of that agency to never completely solve the problem they’ve been hired to solve. To do so would mean there would no longer be a need for their agency. It would mean layoffs, smaller budgets, even elimination entirely. In fact, there’s a strong incentive to exaggerate the problem, if not even exacerbate it. The agency itself is never going to get blamed for the problem. So exaggerating it helps the agency argue for more staff and a larger budget. (Thus, Milton Friedman’s axiom, “Nothing is so permanent as a temporary government program.”)

It doesn’t even need to be a deliberate thing. When your livelihood, your self-worth, and your career depend on things looking a certain way, there’s always going to be a strong incentive for you to see them that way.

Conservatives have always bought into public choice theory when it comes to paper-pushing bureaucrats. But when it come to law enforcement, they often have the same sort of blind faith in the good intentions and public-mindedness of public servants that the left has for, say, EPA bureaucrats. But public choice problems are as prevalent in law enforcement as they are in any other field of government work. And you could make a strong argument that it’s more important that we recognize and compensate for the incentive problems among cops and prosecutors because the consequences of bad decisions can be quite a bit more dire.

If we reward prosecutors who rack up convictions with reelection, higher office, and high-paying jobs at white-shoe law firms, and at the same time provide no real sanction or punishment when they break the rules in pursuit of those convictions, we shouldn’t be surprised if we start to see a significant number of wrongful convictions. If we reward cops who rack up impressive raw arrest numbers with promotions and pay raises, and at the same time don’t punish or sanction cops who violate the civil and constitutional rights of the people who live in the communities they serve, we shouldn’t be surprised if we start to see a significant number of cops more interested in detaining and arresting people than in protecting the rights of the citizens they encounter on their patrols. We can certainly hope that a sense of civic virtue and veneration for justice will override those misplace incentives, but it would be foolish — and has been foolish — for us to rely on that. Incentives do matter.

Any time I link to an article, it’s assumed that I suggest you read the whole thing. In this case, it’s a very strong recommendation that you read the whole thing.

January 9, 2013

What does “status” mean in the Canadian First Nations context?

Filed under: Cancon, Government, Law — Tags: , , , , — Nicholas @ 13:23

If you’re confused by the current debate over First Nations people and their relationship with the Crown, you’ll probably want to read âpihtawikosisân‘s explanation of “status” and other terms-of-law that are used in these discussions:

It has been my experience that many Canadians do not understand the difference between Status and membership, or why so many different terms are used to refer to native peoples. The confusion is understandable; this is a complex issue and the terms used in any given context can vary greatly. Many people agree that the term ‘Indian’ is a somewhat outdated and inappropriate descriptor and have adopted the presently more common ‘First Nations’. It can seem strange then when the term ‘Indian’ continues to be used, in particular by the government, or in media publications. The fact that ‘Indian’ is a legislative term is not often explained.

As a Métis, I find myself often answering questions about whether or not I have Status, which invariably turns into an explanation about what Status means in the Canadian context. The nice thing is, as time passes, fewer people ask me this because it does seem that the information is slowly getting out there into the Canadian consciousness.

To help that process along, I figured I’d give you the quick and dirty explanation of the different categories out there. Well…quick is subjective, I am after all notoriously long-winded.

H/T to Andrew Coyne, who retweeted the link from @romeoinottawa.

Why stop at a mere trillion dollars?

Filed under: Economics, Government, USA — Tags: , , , , , — Nicholas @ 08:59

Zero Hedge on the trillion dollar platinum coin nonsense:

A year ago, out of nowhere, the grotesque suggestion to “resolve” the US debt ceiling with a platinum dollar coin came, and like a bad dream, mercifully disappeared even as the debt ceiling negotiations dragged until the last minute, without this idea being remotely considered for implementation, for one simple reason: it is sheer political, monetary and financial lunacy. And yet there are those, supposedly intelligent people, who one year later, continue dragging this ridiculous farce, as a cheap parlor trick which is nothing but a transparent attempt for media trolling and exposure, which only distracts from America’s unsustainable spending problem and does nothing to address the real crisis the US welfare state finds itself in. And while numerous respected people have taken the time to explain the stupidity of the trillion dollar coin, few have done so as an integral part of the statist mainstream for one simple reason — it might provide a loophole opportunity, however tiny, to perpetuate the broken American model even for a day or two, if “everyone is in on it.” Luckily, that is no longer the case and as even Ethan Harris from Bank of America (a firm that would be significantly impaired if America was forced to suddenly live within its means), the whole idea is nothing more than “the latest bad idea” straight “from the land of fiscal make believe.” We can only hope that this finally puts this whole farce to bed.

[. . .]

Taking these sorts of actions would almost certainly worsen, not ease, the coming battles over the spending — a second reason to be skeptical of the idea of the trillion dollar coin. As we have noted before, the debt ceiling is just one of three brinkmanship moments looming in the next few months. The across-the-board spending cuts that constitute the sequester have only been delayed for two months, and absent new legislation, will start in March. Even more troubling, on March 27 the latest continuing resolution ends and, absent new legislation, all nonessential government programs would have to shut down for lack of funding.

Third, throwing the trillion dollar coin into this mix would not only intensify these two other fights, it would likely poison the well even further in future budget negotiations. With split government, fiscal policy making requires bipartisan agreement. The cliff compromise earned support from both parties, marking a welcome — if brief — respite from partisan politics. The last thing Washington needs is a further escalation in gamesmanship.

Finally, there is a slippery slope from avoiding the debt limit to outright debt monetization. Although proponents see it as a technical fix to a problem that, in their view, never should occur, it means the Treasury would have established a precedent to thwart Congressional limitations on spending and the debt ceiling.

Outside of the legal questions, nothing precludes the Treasury from issuing a coin to pay down the full $16.4 trillion in debt in one fell swoop: true monetization. A trillion dollar coin also would subvert the whole budget process, undermining already fragile public confidence and spooking financial markets. And based on the criteria put forth by the rating agencies, it would represent a stunning failure to devise credible political processes to resolve the longer-term budget issues for the US. A downgrade would very likely follow, in our view.

January 8, 2013

Obesity meta-study challenged the media narrative

Filed under: Government, Health, Media, Science — Tags: , , , — Nicholas @ 10:00

In sp!ked, Timandra Harkness explains why the publication of “Association of All-Cause Mortality With Overweight and Obesity Using Standard Body Mass Index Categories” in the Journal of the American Medical Association (JAMA) got such a strongly negative reaction from the media and various government spokespeople:

The reason this unassuming paper drew howls of outrage was the same as the reason the benefits of moderate alcohol intake are never noted without criticism: it spoils the headline health message that Fat is Bad.

Even worse, it blows the cover on the great myth — that an epidemic of Bad Fatness is sweeping the developed world. By including the dangerously obese, the innocuously tubby and the healthily plump in one category, ‘overweight including obese’, 60 per cent of the English population are labelled as potentially At Risk.

Being At Risk means these people need guidance and protection from their own vulnerable state, from the temptations of our obesogenic world and the frailties of their own sugar-addicted brains. At such a time of national peril, no measure is too extreme.

But less than a quarter of English adults are obese, according to new figures released just before Christmas, a fraction almost unchanged since 2007. And the ‘morbidly obese’ category — BMI over 40, the ones for whom it really might be worth shedding a few pounds, medically speaking — also remains steady since 2009 at 2.5 per cent of the UK population.

If only one in 40 of us is in significant weight-related danger, why do the other 97.5 per cent of us need to be protected by the state against sugary cereals and fizzy drinks? Could it be because only a few of us have fallen, but all of us are in peril? Weak, foolish and easily led astray, we need to be frightened back on to the right path. Thus Tam Fry, spokesman for the National Obesity Forum — who has called for children to be monitored from birth for signs of obesity — told the Independent: ‘If people read this and decide they are not going to die… they may find themselves lifelong dependents on medical treatment for problems affecting the heart, liver, kidney and pancreas — to name only a few.’

So there we have it. Those extra post-Christmas pounds aren’t going to kill you. If you’re approaching an age at which there’s any real prospect you will die, they probably have a tiny protective effect. But if you’re told the truth, suggest the obesity obsessives, you’ll gorge yourself into a disgusting ball of flab.

January 7, 2013

Paul Wells examines the (virtual) entrails

Filed under: Cancon, Government, Politics — Tags: , , , — Nicholas @ 11:58

In Maclean’s, Paul Wells looks deeply into the hidden meanings of the Prime Minister’s rare interview utterances:

The Prime Minister’s year-end interviews are always worth close reading. Partly because he gives few interviews. Partly because those interviews, widely spaced, show how his thinking changes as circumstances do. This year the changes are stark.

The part I’ve just quoted came when Friesen asked Harper about the possibility that Bashar al-Assad might use chemical weapons against Syrian opponents of his regime.

Would NATO intervene? “Well, I don’t want to speculate.”

Is the use of what we used to call weapons of mass destruction a “red line,” as the Obama administration has called it? That was the question that got Harper talking about risks and caution. “What we can continue to do, as I say, is try to work with elements of the opposition and others to try to push that country to a better solution and try to avoid further escalation of this conflict.”

This is what being Prime Minister does to you. A decade ago, when conversation turned to the use of chemical or biological weapons and the theatre was Iraq, it was Jean Chrétien talking about risks and caution and Harper urging red lines. I dare hope we’ll never get to test the hypothetical in Syria, but it was not only when it came to Assad that this year’s Harper was notably less cocky than previous years’. Chastened, one might say, by a year when the world turned out to be more complex than advertised.

Discounting for total political dysfunction

Filed under: Business, Economics, Government, USA — Tags: , , , , , — Nicholas @ 10:30

The Economist reports on last week’s “deal” in Congress and why the markets are still able to function in spite of the almost unprecedented level of political uncertainty:

Markets now live in the policy equivalent of Beirut in 1982. They have adjusted to perpetual political dysfunction. Over the last eight weeks, as the fiscal cliff talks stumbled, revived, collapsed, then came to life again, market movements were surprisingly narrow, and much of them could be explained by tax considerations as investors prepared for higher capital gains and dividend rates. The sang froid perplexed many of us who follow the policy process for a living and knew how high the stakes were. But perhaps we were too close to it. You can steep yourself in the intricacies of political coalitions, the electoral calendar, the makeup of the executive, senate and house, the interaction of permanent and temporary fiscal policy and such arcana as reconciliation, filibusters and blue slips, and yet still not know how to model the outcome. The fiscal cliff perfectly illustrated this: the people closest to the process didn’t know any better how it would end than those reading the newspapers, or not reading the newspapers, for that matter. There were just too many moving parts.

Richard Bookstaber once attributed the evolutionary success of the cockroach to coarse decision rules: it ignores most of the information around it and responds only to simple signals. Investors do something similar when confronted with hopeless complexity. They boil it down to a binary question: disaster/no disaster. Then they ignore all the idiosyncratic inputs and ask: what does experience suggest the probability of disaster is? Four times in the last two years, politicians went up to some do-or-die deadline without going over: in December, 2010, when the Bush tax cuts first came up for expiration; in April, 2011, when the federal government nearly shut down for lack of discretionary spending authority; the following August, when Treasury was days away from hitting the hard debt ceiling; and December, 2011, when the payroll tax cut first came up for expiration. In each case, one side, or both blinked; tax rates never went up, the government never shut down, and Treasury did not stop paying bills, much less default. It was, arguably, a better record than in 1995-96 when the federal government shut down twice and Bill Clinton threatened to suspend social security payments if Newt Gingrich’s Republicans didn’t raise the debt ceiling. Ignore the specifics of the latest episodes, and the logical conclusion is that despite their differences, both sides have powerful incentives to avoid disaster, so they will.

And who are the policy experts to say otherwise? For all the twists and turns, the cliff negotiations ended up where the median market participant a few months ago assumed they would: with a short-term fix and the remainder stuffed in a can and kicked down the road.

What’s that odd whistling sound coming from Wall Street?

January 5, 2013

Jeffrey Simpson on the First Nations’ “Dream Palace”

Filed under: Cancon, Government, History — Tags: , , , , — Nicholas @ 13:19

I didn’t expect to read this in the Globe and Mail which is usually an institution that discusses First Nations issues very carefully indeed:

Large elements of aboriginal Canada live intellectually in a dream palace, a more comfortable place than where they actually reside.

Inside the dream palace, there are self-reliant, self-sustaining communities — “nations,” indeed — with the full panoply of sovereign capacities and the “rights” that go with sovereignty. These “nations” are the descendants of proud ancestors who, centuries ago, spread across certain territories before and, for some period, after the “settlers” arrived.

Today’s reality, however, is so far removed in actual day-to-day terms from the memories inside the dream palace as to be almost unbearable. The obvious conflict between reality and dream pulls some aboriginals to warrior societies; others to a rejection of dealing with the “Crown” at all; others to fights for the restoration of “rights” that, even if defined, would make little tangible difference in the lives of aboriginal people; and still others, such as Attawapiskat Chief Theresa Spence, to go on a hunger strike.

Chief Spence, leading a group or “nation” of about 1,500 people on the shores of James Bay, demanded at the beginning of her strike a series of meetings with the Governor-General and the Prime Minister. This demand reflected a very old and very wrong idea (part of dream-palace thinking) that the “Crown” is somehow an independent agency with which aboriginal “nations” have a direct relationship, whereas the “Crown” is nothing of the sort.

The “Crown” is the Government of Canada, a matter of clearly established constitutional law, which is why Chief Spence made her demand to meet the Prime Minister, too. Stephen Harper was correct in refusing a face-to-face meeting, since a prime minister should not be blackmailed into doing what any group or individual wants.

Bryan Caplan’s “Libertarian Purity Test”

Filed under: Government, Liberty, Politics — Tags: — Nicholas @ 12:56

I’m nowhere near as doctrinaire a libertarian as I used to be: I scored only 79 (out of a possible 160) on this test. It’s clearly my minarchist tendencies that kept me in the bottom half of the scoring (I prefer the “nightwatchman” state with police, courts, and military still being valid activities for the government: to a true anarchist that makes me a splitter if not an actual traitor).

This is the Libertarian Purity Test, which is intended to measure how libertarian you are. It isn’t intended to be any sort of McCarthyite purging device — just a form of entertainment, hopefully thought-provoking. I like it a lot better than the more famous “World’s Shortest Political Quiz” because I haven’t stated the questions with any intent to give an upward bias to a test-taker’s score, and because it gives a clearer breakdown between hard and soft-core libertarians. Enjoy, suggest your friends try it out, and see how you compare to other test-takers…

A note on meaning: The word privatized as used throughout the survey means that a given government service is henceforth supplied by the free market and paid for by consumers. It is distinguished from sub-contracting in which the government uses tax money to hire a private firm to provide a government service.

January 4, 2013

On politicians needing to kick their own asses

Filed under: Government, Media, Politics, USA — Tags: , , , , — Nicholas @ 11:58

Nick Gillespie responds to a recent Bob Woodward column:

In sort-of documenting the dysfunction of a government that can’t even trim chump change from its petty cash drawer, much less write and pass a goddamned budget, Woodward manages to also illustrate why press solons are pretty useless in this whole process too. Sequestration cuts aren’t odious, except to congenital pants-wetters on both sides of the aisle (such as the neo-con defense hawks at the American Enterprise Institute and Leon Panetta, who can’t abide a single dollar ever being cut from any military budget, even after the Second Coming of Christ and the beating of swords into non-voting GM shares). We’ve been racking up trillion-dollar annual deficits for years now, and the idea of cutting $3 trillion from future deficits over a 10-year period causes things to explode? That shouldn’t be a reach under any circumstances, but especially under one in which both parties agree that we need to stop spending money we don’t have on things we don’t need. If the leadership of both parties couldn’t agree to $3 trillion in deficit trims over a decade in which they expect to spend between $40 trillion and $47 trillion, they weren’t going to agree to cuts of $1.2 trillion anyway. That’s the the real story, and it’s one that need to be retold every single day.

Woodward’s invocation of today’s “vulture politics” and his by-comparison invocation of the good old Reagan days is ridiculously ahistorical, especially coming from one of the guys who presided over the past 40-plus years of American history. Today’s political situation isn’t unique in its “demonization” of the opposition. Jesus Christ, George McGovern likened Nixon to Hitler and Reagan was attacked in similar terms. As was Clinton (by Jerry Falwell, who credited the Man from Hope with multiple murders in Arkansas). And then there was also the Bushitler stuff and novels and faux-documentaries about Dubya’s assassination. Somehow, both sides somehow managed to pass budgets (as awful as they were). The fact that Boehner takes a lot of man-tan heat and Obama is called a socialist is light fare by comparison. What is different is the inability of our top men to freaking complete the most basic tasks required of them: to hash out what they government is going to spend each year according to basic and simple-to-understand legislative rule.

In the end, that is not something mystical or overly complicated or tough because they belong to different parties. It’s the easiest thing in the world to get done and while of course “staffers” will do most of the grunt work, Boehner and Obama — and Harry Reid, the hugely incompetent Senate leader who is arguably the single-most responsible villain in the whole dramedy, need to be running the show.

And when it comes to kicking their own asses, our triumvirate of leaders — Obama, Boehner, and Reid — should get in line behind the rest of us. In the end, we pay their tab, so we should be at the front of the line.

January 3, 2013

Rhode Island’s 38 Studios the new poster child for crony capitalism

Filed under: Business, Gaming, Government, Media, Technology — Tags: , — Nicholas @ 11:14

The 2012 bankruptcy of Rhode Island-based video-game developer 38 Studios isn’t just a sad tale of a start-up tech company falling victim to the vagaries of a rough economy. It is a completely predictable story of crony capitalism, featuring star-struck legislators and the hubris of a larger-than-life athlete completely unprepared to compete in business.

Former Boston Red Sox pitcher Curt Schilling, an iconic figure in New England after anchoring a historic playoff comeback which ended a legendary 86-year title drought, founded 38 Studios near the end of his baseball career in the hopes of becoming a big shot in the intensely competitive multi-player gaming world.

Since 2006, Schilling invested millions of his own fortune into 38 Studios, and with the self-assured bravado he exhibited as a major league baseball player, set out to find investors to infuse his company with the roughly $50 million needed to complete 38 Studios’ first game. Although Schilling is the kind of local legend who could get a meeting with every venture capitalist in New England, Massachussets VCs passed on 38 Studios. WPRI-TV’s Ted Nesi reported that one such potential investor said “it would have taken a lot of babysitting to do a deal with Schilling because he was inexperienced and the management was inexperienced.”

Enter Gov. Donald Carcieri (R-R.I.), term-limited and searching for a legacy after presiding over one of the worst state economies in the U.S., featuring long spells of double-digit employment and frequent last-place finishes in rankings of business friendliness. In a classic spasm of “do something, anything” government desperation, Carcieri made it his mission to lure 38 Studios from its headquarters in Maynard, Massachusetts to Rhode Island.

Using his bully pulpit as both governor and chairman of the Rhode Island Economic Devlopment Corporation (RIEDC), a quasi-public agency whose mission is to promote business in the state, Carcieri pushed hard for 38 Studios to receive a $75 million taxpayer-guaranteed loan.

Each loan guarantee must be approved by the Rhode Island legislature, and when the votes were cast in 2010, only one lawmaker voted against it. Rep. Bob Watson (R-Greenwich) noted “a lot of red flags” in a “very risky” deal that was “too fast, too loose, and frankly, a scandal waiting to happen.” Watson added “more often than not, politicians are very poor when it comes to making business decisions.”

Comitology and the EU

Filed under: Bureaucracy, Europe, Government, Humour — Tags: , — Nicholas @ 10:58

Alexandra Swann notes that the great C. Northcote Parkinson predicted the EU’s decision-making mechanics with great accuracy:

If we listen to Daniel Guéguen, Professor of European Political and Administrative studies at the College of Europe, the Europhile madrassa, the equation spells the downfall of the European Union.

Guéguen has worked as a Brussels lobbyist for 35 years; he is a full time federast and one of the remaining true believers in the EU. Given his commitment to the EU project, when he deems its system of governance, comitology, “an infernal system” perhaps it’s time to listen.

The concept of Comitology was invented by the incomparable Professor C Northcote-Parkinson in his seminal work Parkinson’s law of 1958. It was meant as a satire but, like many of the best jokes, they either get elected or, in this case, embedded in the bureaucracy. Here is the Professor explaining the comitology and his equation:

    x=(mo(a-d))/(y+p b1/2)

    Where m = the average number of members actually present; o = the number of members influenced by outside pressure groups; a = the average age of the members; d = the distance in centimetres between the two members who are seated farthest from each other; y = the number of years since the cabinet or committee was first formed; p = the patience of the chairman, as measured on the Peabody scale; b = the average blood pressure of the three oldest members, taken shortly before the time of meeting. Then x = the number of members effectively present at the moment when the efficient working of the cabinet or other committee has become manifestly impossible. This is the coefficient of inefficiency and it is found to lie between 19.9 and 22.4. (The decimals represent partial attendance; those absent for a part of the meeting.)

This beautifully encapsulates the terrifying silliness of what is going on in the tubular steel and stripped Swedish pine chairs of Brussels, and for anyone with an interest in transparency or good governance, it is a serious concern. After all, under various estimates upwards of 75 per cent of our laws, the laws that govern the minutiae of our lives are made in the sterile Committee rooms of the Breydel, Berlyamont, Justis Lupsius and other buildings in the EU quarter of Brussels. That this cosmic joke now governs our lives is just a factor of the brobdingnagian reality of our membership of the EU.

January 2, 2013

The corporate welfare pork in the fiscal cliff negotiations

Filed under: Business, Government, USA — Tags: , , , , — Nicholas @ 09:57

As widely expected, Congress did finally put something to a vote to “save” the country from going over the fiscal cliff. And as everyone should have expected, even a bill to “save” the country was still amply provided with pork for certain corporations:

Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted, which is what’s known as “tax extenders”, or roughly $205B of tax breaks for corporations. With such a banal name, and boring and difficult to read line items in the bill, few political operatives have bothered to pay attention to this part of the bill. But it is critical to understanding what is going on.

The negotiations over the fiscal cliff involve more than the Democrats, Republicans, the middle class and the wealthy. The corporate sector is here in force as well. One of the core shifts in the Reagan era was the convergence of wealthy individuals who wanted to pay less in taxes — many from the growing South — with corporations that wanted tax breaks. Previously, these groups fought over the pie, because the idea of endless deficits did not make sense. Once Reagan figured out how to finance yawning deficits, the GOP was able to wield the corporate sector and the new sun state wealthy into one force, epitomized today by Grover Norquist. What Obama is (sort of) trying to do is split this coalition, and the extenders are the carrot he’s dangling in front of the corporate sector to do it.

Most tax credits drop straight to the bottom line — it’s why companies like Enron considered its tax compliance section a “profit center”. A few hundred billion dollars of tax expenditures is a major carrot to offer. Surely, a modest hike in income taxes for people who make more than $400k in income and stupid enough not to take that money in capital gain would be worth trading off for the few hundred billion dollars in corporate pork. This is what the fiscal cliff is about — who gets the money. And by leaving out the corporate sector, nearly anyone who talks about this debate is leaving out a key negotiating partner.

December 30, 2012

The Gross National Happiness hoax

Filed under: Asia, Economics, Government, Media — Tags: , , , , , — Nicholas @ 12:14

Remember the brief flicker of media interest in replacing the Gross National Product measurement with something called Gross National Happiness? It didn’t seem to catch on, which is fortunate, because the poster child for GNH is Bhutan:

Mainstream economists and almost all national bureaucracies around the world use measures such as Gross Domestic Product (GDP) or Gross National Product (GNP) to measure and track economic activity. These measurements are evidence-based. Hard data is aggregated and analyzed to come up with a picture of a national economy that is accurate and reliable. Based on such data, sound economic and development policies can be formulated. Not so for the Kingdom of Bhutan — a country ruled with an iron fist by its northern-based Buddhist Drukpa monarchy and elite with a transparent façade of democracy designed to obscure the true state of affairs in that country.

Having engaged in a massive ethnic cleansing campaign against its Lhotsampa minority of Nepalese origin from the mid 1980’s to the early 1990’s, Bhutan’s leadership prefers to use the amorphous and malleable measure of Gross National Happiness (GNH) to claim that their citizens — at least the ones that were not forcibly evicted from the country — are among the “happiest” in the world. Being a wholly subjective measure that utilizes no quantifiable data, GNH has been creatively utilized as a propaganda tool by the Drukpa leadership to project an image of Bhutan as a country of smiling Buddha’s. Little do most outside observers know the dark underbelly of this seemingly innocuous portrayal. It willfully ignores the history of ethnic cleansing and institutionalized racial intolerance against Lhotsampas inside Bhutan that continue unabated to this day.

[. . .]

With its record of ethnic cleansing and intolerance, it is morbidly amusing to hear propaganda that Bhutan is some sort of mythic “last Shangri-La,” a land of harmony and peace. Nothing could be more removed from the truth. The charade of ushering in a constitutional monarchy in the last few years and the ascension of the charismatic 31-year-old Oxford-educated King Jigme Khesar Namgyal Wangchuk has led to a fresh burst of official Bhutanese propaganda expounding the unique nature of their happy people and of Gross National Happiness in general.

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