Quotulatiousness

December 24, 2012

What is the French for “voting with your feet”?

Filed under: Europe, Government, Media, USA — Tags: , , , — Nicholas @ 10:03

Put your tax rates up too high and people start to look at alternative living and working arrangements:

Actor Gérard Depardieu’s decision to flee France for Belgium to avoid a 75 percent marginal tax rate on incomes above $1.3 million sends a message we here in America should heed: Those who are singled out for tax increases are not stationary targets. The means of avoiding and evading the taxman are legion.

U.S. government agencies routinely issue estimates of how changes in the tax code will affect the flow of revenues to the treasury. President Obama says the tax changes he has been seeking will bring in $1.6 trillion over a decade. But such estimates assume taxpayers are something other than human beings who engage in purposive action. People like to keep the money they make — why shouldn’t they? — and they typically avail themselves of every legal (and not-so-legal) strategy to do so. Change the tax environment by raising rates or adversely modifying the rules, and taxpayers, especially those in the upper echelons of earners, can be counted on to modify their conduct accordingly; there’s no reason to think their wish to hold on to their money has diminished just because the tax code has changed.

Economists as far back at J. B. Say and Gustave de Molinari in the 19th century understood this. As Molinari wrote in his 1899 book, The Society of To-morrow, “The laws of fiscal equilibrium set a strict limit to the degree within which it is possible to impose new taxes, or to increase the rates of those already in force. The relative productivity of taxes soon shows when this point has been overstepped, for then returns not only cease to rise, but immediately begin to fall.”

December 22, 2012

After so long under minority governments, a majority can feel like a dictatorship

Filed under: Cancon, Government — Tags: , — Nicholas @ 10:21

Andrew Coyne pinpoints the day that Stephen Harper started governing as if he actually had a majority:

Calendar years have no particular significance in the political or electoral cycle — except when they do. Though the Conservatives won the majority they had been three times denied in May of 2011, they did not begin to govern as a majority until this year.

Indeed, the date can be fixed with precision. It was Jan. 26, a Thursday. Until that time the government had been preoccupied with leftover items from the minority years: the crime bills, the Wheat Board, the gun registry, and so on. On that day, Stephen Harper gave a speech in which he at last began to sketch out the broader agenda he had been at such pains to disavow until then.

This, it might be said, was the real Speech from the Throne (the one from the previous June being remembered mostly for a piece of performance art by an impossibly self-involved page), the occasion for the government to lay out before Canadians and their representatives “the unfinished business of the nation.” And so, naturally, it took place thousands of miles away, in Davos, Switzerland.

[. . .]

Last, there are the omnibus budget bills, I and II: the point at which the government’s emerging policy ambitions and continuing contempt for Parliamentary democracy converge. I’ve said my fill about these earlier, so I’ll be brief here. When much of the government’s legislative agenda can be pushed through in a single bill, or two; when “debate” on these hydra-headed monstrosities is itself cut short by government fiat; when these arrive on top of the whole long train of abuses to which Parliament has already been subjected, starting under past governments but with conspicuous enthusiasm under the present – then the question for next year, and for years to come, is clear. It is whether we will still live under a Parliamentary system of government, or something else.

December 20, 2012

Borking, in retrospect

Filed under: Government, History, Law, USA — Tags: , , , , — Nicholas @ 10:14

Walter Olson on the historically nasty confirmation battle that kept Robert Bork off the US Supreme Court:

Of course the confirmation critique that makes it into every Bork obituary isn’t Heflin’s or Johnston’s. It’s Ted Kennedy’s blowhard caricature, intended for northern liberal consumption, of “Robert Bork’s America” as “a land in which women would be forced into back alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids, school children could not be taught about evolution,” and so on.

Never in memory had a judicial nomination been fought in such language. Why?

As a constitutional law scholar, Bork had distinguished himself even among conservatives for his scathing critique of the Warren Court, which he accused essentially of having made up constitutional law as it went along.

To organized liberal groups, on whose behalf Kennedy was acting, this was the next thing to a declaration of war. Yet they couldn’t exactly come out and defend making up constitutional law as you went along as their own vision for the high court.

Instead, they served up a steady diet of vitriol and wild oversimplification, especially in TV ads and other messages delivered outside the confirmation hearings.

The Washington Post itself opposed Bork’s confirmation, yet nonetheless editorialized against the “intellectual vulgarization and personal savagery” to which some of his opponents had descended, “profoundly distorting the record and the nature of the man.”

December 19, 2012

ARA Libertad finally free to sail home from Ghana

Filed under: Africa, Americas, Government, Military — Tags: , , , , , — Nicholas @ 15:05

If you’ve been following the debt-related travails of the Argentine navy’s flagship, you’ll recall that the ship was impounded on a visit to Ghana back in October. The BBC is now reporting that the ship has been released, and Argentinian sailors will be able to take the frigate home after a UN court decision:

The Libertad set sail from Ghana’s main port of Tema after a United Nations court last week ordered its release.

Argentina sent almost 100 navy personnel to man the three-masted training ship.

It was impounded after a financial fund said it was owed money by Argentina’s government as a result of a debt default a decade ago.

[. . .]

In November, sailors on board the Libertad reportedly pulled guns on Ghanaian officials when they tried to board the vessel to move it to another berth.

The lengthy diplomatic row began when the ship was prevented from leaving Ghana on 2 October, after a local court ruled in favour of financial fund NML Capital. The fund is a subsidiary of US hedge fund Elliot Capital Management which is one of Argentina’s former creditors.

Initial report on the seizure here and here.

December 18, 2012

The real reason it’s so hard to cut military spending

Filed under: Bureaucracy, Government, Military, USA — Tags: , , , — Nicholas @ 11:00

From the January issue of Reason, Veronique de Rugy explains how the system is set up to protect military spending from even the most determined spending cuts:

The Department of Defense, with its 2.3 million workers, is the single largest employer in the United States. The defense industry, which is the main private-sector recipient of defense dollars, directly or indirectly employs another 3 million people. This, in a nutshell, is why it’s so hard to cut government spending in general and military spending in particular.

The scope and reach of the government are far bigger than we think, explains John J. Dilulio of the National Academy of Public Administration in the Spring 2012 issue of National Affairs. It’s more than just the money Washington spends or the people it employs. It’s also the people in the private sector who live off that spending. It’s the nonprofit organizations paid to help administer government programs. It’s the contractors who run the programs, the contractors’ sub-contractors, and so on.

[. . .]

Even when military contractors’ profits have reached an all-time high, Congress seems committed to sheltering the companies from any budget cuts. Industry lobbying probably plays a role here. According to the Center for Responsive Politics, the U.S. defense and aerospace lobby doled out $24 million to political campaigns and committees during the 2008 campaign cycle and spent nearly $60 million on lobbying in 2011. Lockheed Martin alone spent $15 million in 2011 on its lobbying efforts, plus $2 million in political contributions. Boeing spent $16 million on lobbying the same year.

In his seminal 1971 article “The Theory of Economic Regulation,” the Nobel-winning economist George Stigler noted that agencies eventually become captive of the very interest groups they were ostensibly designed to police. Writing regulation or even spending legislation requires in-depth industry knowledge, so federal agencies and lawmakers tend to hire directly from the very companies they must oversee or spend money on.

The reverse is true too. In order to gain better access to their regulators and government funds, companies hire lobbyists who used to work for Congress or government agencies. Of the 408 lobbyists employed by the military industry to apply pressure on Congress, 70 percent used to work on Capitol Hill.

Don’t expand the Canada Pension Plan: reform it

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 10:52

Andrew Coyne briefly praises the CPP before advancing a plan to (eventually) supplant it entirely:

By most measures, Canada’s retirement income support system is an outstanding success. The poverty rate for Canadian seniors, with just 4.4% living below half the median income, is among the lowest in the world. The Canada Pension Plan, once careening towards insolvency, is now on a sounder footing. Millions of Canadians contribute to their Registered Retirement Savings Plans every year, with a view to replacing more of their income than the 25% covered by the CPP; Tax-Free Savings Accounts are a fast-growing alternative. For most people, then, the pension system works well. There is no evidence of a generalized pension “crisis.”

[. . .]

Suppose an additional levy were tacked onto CPP premiums. Only instead of going into the regular CPP pot, the funds would accumulate in the contributor’s own personal fund — like an RRSP, only compulsory. To avoid wasting money on management fees, funds would be invested strictly passively (ie buying the indexes), with the particular asset mix varying as the investor aged: more stocks when younger, more bonds when older.

Any increase in benefits would thus have to be fully funded; at the same time, since legal title to the funds would rest with the contributor, there would be no way politicians could raid the kitty. Moreover, with such a direct link between contributions and the size of their nest egg, contributors would be less likely to see the rise in premiums as a tax increase, and more as savings, mitigating labour market effects, at least on the supply side.

On its own, this would be vastly preferable to CPP expansion. If we liked the results, we might even think of going further. Over time, one could imagine migrating more and more of the regular CPP over to these mandatory personal accounts, allowing the CPP fund to be slowly wound down. Rather than simply expanding the CPP, the challenge of population aging presents an opportunity to reform it.

December 14, 2012

Once upon a time, ministers of the crown would resign over cock-ups as blatant as the F-35 project

Filed under: Cancon, Government, Military — Tags: , , , — Nicholas @ 08:57

In Maclean’s, John Geddes illustrates why we are not as mature a society as we think:

It was painful to listen to Defence Minister Peter MacKay this afternoon as he faced repeated questions from reporters about whether he has any regrets about his handling of the government’s program to buy F-35 fighter jets.

Today’s news, not surprisingly, is that the problem-plagued Lockheed Martin fighter is only one of several jets whose costly tires the government will soon be kicking. And so pretty much everything MacKay has ever said about the necessity and inevitability of the F-35 procurement has proven to be dead wrong.

He might have made it easier to hear his answers without wincing had he just admitted to past mistakes. Failing that mature, obvious response, he might have clung to a fragment of dignity by resolving at least not to drag Canadian men and women in uniform into it.

But no. His couldn’t restrain himself. He couldn’t resist bringing up his concern for the troops when pointedly asked if he had any regrets about his past harsh words toward critics who raised what turned out to be entirely valid concerns about the F-35 program.

And another article from earlier this week from Andrew Coyne:

Yet, even now, MacKay and his officials are still trying to claim operating costs should not really be included, because “we’d have to spend that money anyway,” i.e. regardless of which plane was purchased, or even if we somehow hung onto the old CF-18s. This is interesting, but irrelevant. It’s useful to know how much more one plane would cost than another. But we also just need to know the cost, period. We don’t just need to compare the cost of one fighter jet with another. We also need to compare the benefits of spending a given sum on fighter jets, as a budget item, versus the other purposes to which the same money could be put: tanks, or health care, or cutting taxes.

And this brings us to the second reason this matters: because whatever the rules are, the government is obliged to follow them; because it knew what the rules are, and didn’t. I can understand why, in a way. There’s no doubt life-cycle costs can be misunderstood, or misrepresented, as if that $45.8-billion were just the acquisition cost, or as if it all came out of one year’s budget. But just because a rule is inconvenient does not entitle you to ignore it.

And even if one were inclined to excuse the initial deception, what is really inexcusable is the government’s subsequent refusal to back down, even when it was called on it, but rather to carry on spinning — as it did after the Parliamentary Budget Officer’s report, as it did after the (current) Auditor General’s report, as it is doing even today.

Update: Paul Wells in Maclean’s:

It has been that kind of month. More or less explicit repudiation of previous acts and stances has been the theme of the year-end for Stephen Harper and his colleagues. One of the questions we are left with is how Harper, notoriously a risk-averse, control-freak incrementalist, managed to leave hundreds of feet of skid marks around a bunch of big files.

[. . .]

Of course what happened is that times changed. The government’s costing of the F-35 was optimistic and short-term to begin with. Optimism worked out the way it usually does when you’re buying something big and untested. The old talking points grew stale, then ludicrous, and the government stuck with them until the government looked stale and ludicrous, and now it denies saying what it once said. None of this is a tragedy: the jets haven’t been bought, no purchase order has been cancelled, there is still time to choose a more realistic course. But it’s all been a bit awkward.

December 12, 2012

Do Republicans believe in federalism?

Filed under: Government, Law, Politics, USA — Tags: , , , — Nicholas @ 11:34

Jacob Sullum on the rising tide of liberalization at the state level — gay marriage and marijuana legalization — and whether the Republicans will support federalism in these cases:

Nationwide support for marijuana legalization, like nationwide support for gay marriage, has increased dramatically, although not quite as swiftly, rising from 12 percent in a 1969 Gallup poll to a record 50 percent last year. While support for legalization dipped a bit during the anti-pot backlash of the Just Say No era, it began rising again in the 1990s. Public Policy Polling recently put it at 58 percent, the highest level ever recorded.

[. . .]

Just as an individual’s attitude toward gay people depends to a large extent on how many he knows (or, more to the point, realizes he knows), his attitude toward pot smokers (in particular, his opinion about whether they should be treated like criminals) is apt to be influenced by his personal experience with them. Americans younger than 65, even if they have never smoked pot, probably know people who have, and that kind of firsthand knowledge provides an important reality check on the government’s anti-pot propaganda.

Another clear pattern in both of these areas: Republicans are much more likely than Democrats to oppose legalizing gay marriage and marijuana. Yet Republicans are also more likely to oppose federal interference with state policy choices. In light of DOMA’s disregard for state marriage laws and the Obama administration’s threats to prevent Colorado and Washington from allowing marijuana sales, now is put-up-or-shut-up time for the GOP’s avowed federalists.

December 11, 2012

Reason.tv: James Payne on Six Political Illusions

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

“The first thing [children] think about of government is that it is like a super parent,” says author and Reason Magazine contributor James Payne. Payne points out that seeing government as having the virtues of a parent — wisdom, responsibility, money, unlimited funds for whatever you need — has lead to illusions about what role the government should be playing in our lives.

Payne sat down to talk with Reason TV at Libertopia 2012 in San Diego, Calif. to discuss his book, Six Political Illusions: A Primer on Government for Idealists Fed Up with History Repeating Itself.

December 9, 2012

Sheldon Richman decries “Romanticizing Taxation”

Filed under: Government, History — Tags: , — Nicholas @ 12:25

Of all the topics you might try to romanticize, taxation would certainly be at the bottom of the list:

In the debate over avoiding the “fiscal cliff” — especially over whose taxes should and shouldn’t be raised — I detect an annoying attempt to romanticize taxation. I read this as an act of desperation on the part of those who want higher taxes on the wealthy, for there is nothing romantic about taxation.

The other day MSNBC’s Chris Hayes invoked Franklin Roosevelt in support of higher taxes on the top 2 percent. Pulling out all the stops, Hayes quoted from one of FDR’s October 1936 campaign speeches […]

Roosevelt’s claim that we can judge the social conscience of the government by how it collects taxes is true in a way he could not have imagined. Contrary to FDR and Justice Holmes, taxes are neither a price (in the voluntary-transaction sense) nor club dues. On the contrary, they are exactions by threat of violence. Some social conscience! How ironic that organized society and civilization itself are said to depend on the government’s threatening peaceful people if they fail to surrender their property as demanded by politicians who presumptuously and self-servingly claim to “represent” all the people.

Far from some enlightened institution, taxation began when conquerors realized that formal and continuing appropriation of a subject population’s wealth was preferable to hit-and-run pillaging. For this to work, however, the rulers needed to convince the peasants that the regime would protect them from predators in return for their regular remittances. That’s right: It was a protection racket, from which the racketeers and their cronies profited handsomely. For the taxpayers, there was little choice in the matter. They weren’t buying protection as people buy insurance in the market, and they weren’t paying dues as they would later pay dues to mutual-aid societies. They paid or they were punished. The ideology of benevolent state protection reduced enforcement costs because the ruled outnumbered the rulers and widespread tax resistance would have doomed the regime. Things have changed little in our time.

Frank Fleming asks why the Republicans are so down on Susan Rice

Filed under: Government, Humour, Politics, USA — Tags: , , — Nicholas @ 12:01

He’s genuinely puzzled at the Republican stance:

The Republicans’ opposition to Susan Rice’s potentially becoming the next secretary of state is pretty hard to understand.

It wasn’t long ago that Republicans were all for a different black woman named Condoleezza Rice taking the same job — is the GOP just bigoted about the name Susan?

Republicans’ stated objections to Rice make no sense. They complain that she’s “dishonest” and “incompetent,” to which she could easily respond, Well, duh, that’s why I work for the government.

[. . .]

This idea that President Obama should only appoint honest, competent people is really unfair. The guy is a Chicago politician; he’s probably never once met anyone like that.

Just look at his first Cabinet to see how out-of-the-blue this demand for competency is. He has a treasury secretary who couldn’t figure out how to pay his own taxes. His attorney general leads a Justice Department that somehow thought selling guns to Mexican drug cartels would have good results.

Then there are Obama’s secretaries of commerce, who were supposed to be promoting job creation and economic growth — who in the world knows what they’ve been up to these past four years?

Really, looking at the administration as a whole, Obama did better than we could have expected by appointing only one czar who was a Communist truther.

December 6, 2012

Zero Hedge talks Keynes and Hayek

Filed under: Economics, Europe, Government, USA — Tags: , , , — Nicholas @ 09:52

Most politicians have a time sense that lasts just about as long as the current electoral cycle. Economics doesn’t fit neatly into that kind of cramped timescale. Politicians have a lot of influence over the long-term economy, but lack the sense of involvement over that long term because they have to stay tightly focussed on the next election (or they don’t get re-elected). This is one of the systemic faults that’s landed us in the long-term problems we’re facing right now:

Salma Hayek is beautiful, rich and famous. Friedrich Hayek is a deceased Austrian economist. He wasn’t very good looking, certainly not wealthy but he did become famous — but only 20 years after his death and then only within the make believe world of nerdy economists. Fortunately for the World today, if we are lucky, Friedrich Hayek may become the most famous Hayek of them all. Until then, the World remains firmly trapped in an economic hell created by Friedrich’s (and therefore Salma’s) arch enemy — John Maynard Keynes. IceCap’s Keith Dicker points out that, as most politicians and central bankers view the World in very short time frames, to truly understand the devastation wreaked by Keynesian economics, one has to take a step back and see how the financial destruction accumulated over time. It is true that these policies initially provided sugar highs for the economy — but the 3 step cycle of cutting interest rates, cutting taxes and borrowing money to create growth has finally reached its end point. If Mr. Keynes was alive today, we are confident he would be embarrassed that his lifelong work had been so severely distorted.

[. . .]

Since WWII, the Americans, Japanese, British and Europeans have spent way more money than they owned. But that was ok because the money they borrowed wouldn’t have to be repaid until some far away day in the future.

Unfortunately the future has now arrived and today, the next generations of Americans, Japanese, British and Europeans have all plunged into a deathly debt spiral.

Today it is no coincidence that the Americans, Japanese, British and Europeans have all set interest rates as close to 0% as possible.

Also today, it is no coincidence that the Americans, Japanese, British and Europeans are all printing money.

And finally, today it is also no coincidence that the Americans, Japanese, British and Europeans ignored Friedrich Hayek and instead followed the economic principles of John Maynard Keynes.

Today the entire global economic and financial system is rooted in unwavering support for John Maynard Keynes and his beliefs in deficit spending and debt-fueled growth.

December 4, 2012

An American view of Canada’s immigration policies

Filed under: Cancon, Economics, Government, USA — Tags: , , , — Nicholas @ 13:11

Shikha Dalmia says that the US could learn useful lessons on immigration policy from Canada:

… Canada’s provincial-nominee program is a model of economic enlightenment. Under this system, 13 provincial entities sponsor a total of 75,000 worker-based permanent residencies a year, and the federal government in Ottawa offers 55,000. Each province can pick whomever it wants for whatever reason—in effect, to use its quota, which is based on population, to write its own immigration policy.

Provinces may pick applicants left over from the federal program. They can also solicit their own applicants from anywhere in the world. In a direct attempt to poach talent from the U.S., some provinces are sponsoring H1-B holders stuck in the American labyrinth.

The government in Ottawa can’t question either the provinces’ criteria or their methods of recruitment. Its role is limited to conducting a security, criminal and health check on foreigners picked by the provinces, which has cut processing time for permanent residency to one or two years—compared with a decade or more in the U.S.

Richard Kurland, a lawyer who is considered Canada’s top immigration expert, notes that provinces use the program for diverse goals such as enhancing existing cultural or ethnic ties with other countries. Not surprisingly, the most popular reason is economic: to augment the local labor market.

The program gives British Columbia the same flexibility to sponsor, say, bricklayers as it gives Ontario to sponsor computer programmers. It doesn’t treat the entire Canadian economy as monolithic and pretend that distant federal bureaucrats can effectively cater to local job markets. (Canada’s federal program is a different story altogether.)

December 3, 2012

The not-so-hidden Agenda 21

Filed under: Books, Bureaucracy, Environment, Government, Media — Tags: , , , , — Nicholas @ 09:07

In the Libertarian Enterprise, John Walker talks about the UN’s Agenda 21:

In 1992, at the United Nations Conference on Environment and Development (“Earth Summit”) in Rio de Janeiro, an action plan for “sustainable development” titled “Agenda 21” was adopted. It has since been endorsed by the governments of 178 countries, including the United States, where it was signed by president George H. W. Bush (not being a formal treaty, it was not submitted to the Senate for ratification). An organisation called Local Governments for Sustainability currently has more than 1200 member towns, cities, and counties in 70 countries, including more than 500 in the United States signed on to the program. Whenever you hear a politician talking about environmental “sustainability” or the “precautionary principle”, it’s a good bet the ideas they’re promoting can be traced back to Agenda 21 or its progenitors.

When you read the U.N. Agenda 21 document (which I highly encourage you to do—it is very likely your own national government has endorsed it), it comes across as the usual gassy international bureaucratese you expect from a U.N. commission, but if you read between the lines and project the goals and mechanisms advocated to their logical conclusions, the implications are very great indeed. What is envisioned is nothing less than the extinction of the developed world and the roll-back of the entire project of the enlightenment. While speaking of the lofty goal of lifting the standard of living of developing nations to that of the developed world in a manner that does not damage the environment, it is an inevitable consequence of the report’s assumption of finite resources and an environment already stressed beyond the point of sustainability that the inevitable outcome of achieving “equity” will be a global levelling of the standard of living to one well below the present-day mean, necessitating a catastrophic decrease in the quality of life in developed nations, which will almost certainly eliminate their ability to invest in the research and technological development which have been the engine of human advancement since the Renaissance. The implications of this are so dire that somebody ought to write a dystopian novel about the ultimate consequences of heading down this road.

December 2, 2012

Define or be defined: fiscal edition

Filed under: Government, History, Politics, USA — Tags: , , , — Nicholas @ 10:54

Ron Hart talks about the distant past where congress passed budgets and those budgets were actually in surplus:

Most Americans expect politicians to work out a back-room deal to avoid embarrassing themselves again. The politicians feel these deals are too ugly for us to watch, so they are compelled to spare us the indignity of the “most transparent president” ever. Political deals are like sausage; it is best not to watch the product being made. The difference is, sausage as an end product is actually good.

In the Democratic vernacular, taxes have changed to “revenues.” Long ago they replaced the word “spending” with “investments,” especially when wasting money on Solyndra and the like. They think we are stupid.

When Bill Clinton so famously “balanced the budget” with the Internet boom and all the taxes from those stock sales, the GOP and Newt Gingrich passed a budget (yes, Congress used to do that) of $1.7 trillion in expenditures. Adjusted for inflation, our federal government would be spending $2.3 trillion today and collecting $2.5 trillion in “revenues,” resulting in a $200 billion surplus. But instead of increasing government spending in line with normal inflation, under Bush and Obama we are spending $3.8 trillion today. Democrats, who believe we have a “revenue” problem instead of a “spending” problem, must also think they have a bartender problem, not a drinking problem.

Those Republican neocons who have never seen a country they do not want to bomb because it looked at us wrong, have to give on defense. We spend $1.19 trillion a year on defense — more than the other top 10-countries combined and more than six times what second-place China spends.

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