Quotulatiousness

April 5, 2012

Why government stimulus is usually a bad idea

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

Mike Milke of the Fraser Institute:

Frum’s praise for Ottawa’s go-slow approach on balanced books is premised on the perception that if Ottawa actually cut spending (as opposed to slowing the rate of growth) such actions would endanger our prosperity: “If you reduce spending too fast, you crimp your economy,” wrote Frum.

But that’s a mistaken notion.

To use just one example from a large body of research, in 2009, leading fiscal policy expert and Harvard University professor Alberto Alesina and his colleague Silvia Ardagna reviewed stimulus initiatives in Canada and 20 other industrialized countries from 1970 to 2007. In the 91 instances where governments tried to stimulate the economy, it turned out the unsuccessful attempts generally were the ones based on increased government spending. Alesina noted that “a one percentage point higher increase in the current [government] spending-to-GDP ratio is associated with a 0.75 percentage point lower growth.”

In other words, stimulus spending doesn’t increase economic growth; it harms it.

To see how Ottawa’s own stimulus spending was unnecessary, consider how Canada emerged from the last recession and how government stimulus spending had nothing to do with it. Our recession ended in mid-2009; it was only about then that federal and provincial governments started spending extra (borrowed) stimulus cash.

To credit stimulus spending for the end to Canada’s recession, one must argue that extra (borrowed) dollars mostly spent after June 2009 somehow magically rescued the Canadian economy before June 2009.

All the borrowing did have one effect: It added to the existing large federal debt mountain, forecast to hit $614-billion in 2015, up from $457-billion in 2008.

The government’s stimulus spending was demanded by the opposition, but evidence since then indicates that the minority Tories would probably have passed a stimulus budget even if the opposition didn’t give them political cover.

A useful idiot wants even more state surveillance, more Big Brother

Filed under: Britain, Government, Liberty — Tags: , , , , , — Nicholas @ 09:01

Dan Hodges on his love affair with the surveillance state, and his overwhelming desire for even more government snooping:

I want to live in a surveillance state. Big Brother, come cast your watchful eye over me and mine. I love you, bro.

Seriously, when I saw the outcry over Government plans to gain access to telephone, email and internet, my initial reaction was: “You mean they can’t do that already?”

I assumed, somewhat stupidly, that everything we said, typed or viewed was routinely monitored, and then filtered by some giant, super-secret computer tucked away in a heavily guarded subterranean basement of GCHQ: “Hodges has just said he wants to shoot another Liverpool player, sir.” “Oh, he’s always saying that, Jones. Ignore him.”

I don’t want less surveillance, I want more of the stuff. My idea of the perfect society is one where every street corner has a CCTV camera, everyone has a nice shiny ID card tucked in their wallet and no extremist can even think of logging onto a dodgy website without an SAS squad abseiling swiftly through their window.

April 4, 2012

David Akin: The F-35 fiasco is now a boondoggle

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

Nobody in the government or the Department of National Defence comes off well in this politico-techno-bureaucratic mess:

The acquisition process to replace our aging CF-18 fighter jets can now officially be proclaimed as the F-35 boondoggle.

In a damning report Tuesday, Auditor General Michael Ferguson said the whole process in which the Harper Conservatives decided to allocate at least $25 billion over the next 20 years to buy 65 F-35 Lightning II “fifth generation” fighter jets was gummed up by Department of National Defence bureaucrats — and possibly air force officers — who flat out lied to their political masters and to Parliament about the costs and risks associated with the program.

The only good news is we have not yet spent that $25 billion or signed any contracts.

Canada has generally been well served by the civil service (I grit my teeth to say that, as I’m not at all fond of big government), if only in comparison to other countries. One of the better inheritances from Britain is the (relatively) non-political, impartial bureaucracy. In this case, however, the bureaucracy has failed, and failed spectacularly:

But the politicians, like any prime minister or cabinet minister before them, has to be able to rely on the bureaucracy to give them the straight goods.

That did not happen.

Here’s Ferguson in his report: “National Defence told parliamentarians (last year) that cost data provided by U.S. authorities had been validated by U.S. experts and partner countries which was not accurate at the time. At the time of its response, National Defence knew the costs were likely to increase but did not so inform parliamentarians.”

In other words, DND bureaucrats lied. Full stop. Period.

Here’s another paragraph from Ferguson: “Briefing materials did not inform senior decision-makers, central agencies, and the Minister [of National Defence] of the problems and associated risks of relying on the F-35 to replace the CF-18.”

And another: “We found that the ministers of National Defence and Industry Canada and those ministers on the Treasury Board were not fully informed (in 2006) about the procurement implications.”

I’ve been less-than-fully-supportive of the F-35 acquisition, as a quick perusal of F-35 related posts will show, but this is now much more important than the question of what aircraft (if any) the RCAF will be purchasing. It’s now a case of finding out how deep the rot is in the DND and whether the RCAF actively aided the deception. If so, heads must roll.

Update: MILNEWS.ca has a round-up of reporting on the Auditor General’s report, focusing on the F-35 program.

The authoritarian High-Modernist recipe for failure

Filed under: Bureaucracy, Government, History, Liberty — Tags: , , , — Nicholas @ 08:37

Charles Stross linked to this older post at Ribbonfarm discussing “how to think like a state”:

James C. Scott’s fascinating and seminal book, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, examines how, across dozens of domains, ranging from agriculture and forestry, to urban planning and census-taking, a very predictable failure pattern keeps recurring.

[. . .]

Scott calls the thinking style behind the failure mode “authoritarian high modernism,” but as we’ll see, the failure mode is not limited to the brief intellectual reign of high modernism (roughly, the first half of the twentieth century).

Here is the recipe:

  • Look at a complex and confusing reality, such as the social dynamics of an old city
  • Fail to understand all the subtleties of how the complex reality works
  • Attribute that failure to the irrationality of what you are looking at, rather than your own limitations
  • Come up with an idealized blank-slate vision of what that reality ought to look like
  • Argue that the relative simplicity and platonic orderliness of the vision represents rationality
  • Use authoritarian power to impose that vision, by demolishing the old reality if necessary
  • Watch your rational Utopia fail horribly

The big mistake in this pattern of failure is projecting your subjective lack of comprehension onto the object you are looking at, as “irrationality.” We make this mistake because we are tempted by a desire for legibility.

[. . .]

Central to Scott’s thesis is the idea of legibility. He explains how he stumbled across the idea while researching efforts by nation states to settle or “sedentarize” nomads, pastoralists, gypsies and other peoples living non-mainstream lives:

    The more I examined these efforts at sedentarization, the more I came to see them as a state’s attempt to make a society legible, to arrange the population in ways that simplified the classic state functions of taxation, conscription, and prevention of rebellion. Having begun to think in these terms, I began to see legibility as a central problem in statecraft. The pre-modern state was, in many crucial respects, particularly blind; it knew precious little about its subjects, their wealth, their landholdings and yields, their location, their very identity. It lacked anything like a detailed “map” of its terrain and its people.

The book is about the 2-3 century long process by which modern states reorganized the societies they governed, to make them more legible to the apparatus of governance. The state is not actually interested in the rich functional structure and complex behavior of the very organic entities that it governs (and indeed, is part of, rather than “above”). It merely views them as resources that must be organized in order to yield optimal returns according to a centralized, narrow, and strictly utilitarian logic.

It’s a long post, but it is well worth reading. In a couple of throwaway examples, it rather cleverly ties the Indian caste system (as made “legible” by the Raj) and the entire Roman empire to Scott’s failure model.

April 2, 2012

Kelly McParland: Judge Harper not on what he says, but what he does

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 09:14

In the National Post, Kelly McParland scrutinizes the entrails of the federal budget to determine what Prime Minister Stephen Harper is really thinking:

It’s pretty self-evident that prime ministers reveal a lot of their own character in the content of their budgets, but it may be particularly so for Stephen Harper. The guy is an economist, after all. Messing around with graphs and figures was what he planned to do with his life, if seizing control of the country’s government didn’t work out. And since we know he’s a bit of a micro-manager, it’s probably safe to say there’s at least as much Harper as there is Jim Flaherty in the nitty gritty of the latest budget document. So let’s use it to figure out what Stephen Harper believes — really believes — when it comes to running the country.

We know what he says he believes in: smaller government, fewer bureaucrats, restrained spending, less intrusion, an end to taxpayer-financed welfare for businesses and governments. Accountability, prudence, fairness. Individual responsibility rather than the smothering embrace of the nanny state. No more currying favour with every special-interest advocacy group that captures the attention of congenitally correct.

Maybe on some plane he does honestly hold those values dear to his heart. But we all profess to believe in ideals we never quite get around to displaying. Mr. Harper has been Prime Minister for six years, and since last May has had the majority needed to have his way with legislation. Yet, as Andrew Coyne has so clearly demonstrated on more than one occasion, Mr. Harper’s actions habitually belie his words. If he were applying for membership in the True Conservative Believers Club of Canada, they’d turn him away as unqualified.

The August riots: another study that finds exactly what it expects to find

Filed under: Britain, Government, Media — Tags: , , , , — Nicholas @ 09:01

Neil Davenport on the most recent report on the causes of the August riots in Britain:

Once again, an independent panel, this time set up by the government, rolls out a rehearsed number of ‘social factors’ to explain away the disturbing events: unemployment and lack of opportunities for young people; ‘forgotten families’; police harassment and a widespread ‘culture of materialism’. The panel, which visited 21 communities and interviewed thousands of people affected by the riots, says its wide-ranging recommendations ‘must be enacted together’ if the risk of further riots is to be reduced. In a conclusion that bizarrely echoes Tony Blair’s time in office, panel chair Darra Singh says that everyone must have a ‘stake in society’. It makes you wonder why ‘stakeholder society’ policies didn’t actually work in the first place.

[. . .]

None of the enquiries have examined the broad cultural changes that have taken place in British society which, more often than not, are institutionalised in English schools and other state agencies. In fact, this is the ‘social context’ that ought to preoccupy researchers, not the handwrung staples of poverty and unemployment. To approach the riots in this way is not to rehearse ‘teachers aren’t strict enough’ platitudes. It is to examine the kind of destructive values that have been passed down from the top of society: namely, the fostering of assertive victimhood whereby nobody is expected to be accountable for their own actions. It really is somebody else’s fault.

What every schoolchild learns from an early age is that both emotional hurts and tick-box disadvantages — from minor medical problems to class/ethnic background — constitute a person’s default status. It is only by placing demands on state providers that these ‘hurts’ are temporarily assuaged. This is what is meant by a culture of entitlement — victim status has to be recognised and then rewarded by state providers. The higher the perceived victim status, the greater the expectation that somebody else must make provisions or allowances (or even an educational maintenance allowance). In this sense, looting from JD Sports becomes justified, even acceptable, because of the expectations that somebody must pay for a looter’s inflated sense of grievance.

Indeed, many of August’s looters rolled out a lexicon of ‘hurts’ in order to justify their destructive, anti-social behaviour. According to this cultural script, social solidarities are entirely alien because young people have been socialised to dwell on their self-esteem above all else. Far from other people or a wider community being a source of support, they are more often seen as a target for all sorts of imaginary grievances. Local shopkeepers and random individuals attacked during the August riots were, in some way, being held responsible for young people’s poverty and lack of employment prospects. As one of the blasé looters put it, ‘we wanted to show the rich that we can do what we want’. If young people have grown up with the belief that they are automatically held back by social disadvantages, often promoted by state agencies themselves, then a local community itself can become a target for retribution.

[. . .]

Once again, another report on last August’s riots is an exercise in advocacy research, whereby the research neatly matches already rehearsed conclusions. The government panel’s recommendations, failing to recognise the profound significance of the riots, follow the line of wishful thinking and delusion pursued by radical commentators. Furthermore, the panel’s instinctive elitism simply echoes the radical left’s own distrust of ordinary people. Institutionalising the claim that most people are naturally incapable and useless is what destroyed informal communities in the first place. As the nannying, hectoring tone of the latest report into the riots shows, what could be more morally debilitating and soul-destroying?

March 31, 2012

Botched investigation into GCHQ staff member’s mysterious death

Filed under: Britain, Government, Science, Technology — Tags: , , , — Nicholas @ 09:17

This sounds particularly bad:

Forensic investigators have apologized for the bungling of the inquiry into the mysterious death of a codebreaker employed by the Government Communications Headquarters (GCHQ).

In August 2010, Gareth Williams, described as a mathematical genius by his peers and employed at GCHQ since leaving university, was found dead in his flat in London. Williams, who had recently qualified for deployment with MI6 — Britain’s version of the CIA — was found naked and partially decomposed in a sports bag that had been locked from the outside and placed in the bath.

In the pre-inquest hearing on Friday, the court heard that the investigation into Williams’ death had been botched from the start. LGS Forensics said that DNA found on Mr Williams’ body was investigated, but later turned out to have been transferred there from one of the forensic scientists investigating the death, and a search of the apartment turned up no clues as to his death.

Warning: Despite a total lack of evidence, we still want video game “violence” warning stickers

Filed under: Gaming, Government, Liberty, Media, Technology — Tags: , , , — Nicholas @ 00:14

Erik Kain in Forbes on the latest attempt to put scare warnings on pretty much all video games sold in stores:

“WARNING: Exposure to violent video games has been linked to aggressive behavior.”

That’s the label Reps. Joe Baca and Frank Wolf want to place on every video game that hits store shelves.

Well okay, not every video game. Just every game with an E (Everyone) rating or higher. Only EC (Early Childhood) games would avoid the label. Every other game, regardless of content, would have the equivalent of cigarette warnings slapped on them.

This means that games like Tiger Woods PGA Tour would get a violence-warning label.

Can I humbly suggest that we sponsor a bill that would slap warning labels on all our elected officials?

“WARNING: May enact pointless, freedom-quashing laws based on bad data and lies due to sanctimonious pandering to special interest groups.”

The EFF is on the case.

EFF has put together an action alert that lets you to tell your Congressmember that you stand against the unnecessary and burdensome regulation of speech in video games, and that she should too.

Even though it is not required by law, many video game developers have been self-regulating games for age-level and content with Entertainment Software Ratings Board (ESRB) ratings since 1994. That system is widely understood in the marketplace, and allows consumers and parents to make informed decisions about their video game purchases.

March 30, 2012

Best — and most accurate — TV show ever on parliamentary government to return after 24 years

Filed under: Britain, Bureaucracy, Government, Humour, Media — Tags: , — Nicholas @ 10:20

We’re talking about the return of Yes, Prime Minister:

The great satire of British bureaucracy, Yes, Prime Minister, is to return after 24 years away from our TV screens. The original scriptwriting duo of Antony Jay and Jonathan Lynn has already turned in their first plot, says UKTV, which has has commissioned the show to be broadcast on UK Gold. The BBC originals, Yes, Minister and Yes, Prime Minister ran from 1980 to 1988.

[. . .]

The original series was spookily prescient about today’s mandarinate. Last year The Spectator‘s political editor estimated that only four out of 22 elected ministers are actually in charge of their departments — the rest are run by the permanent government of the bureaucracy. Four may actually be on the high side.

The Thick of It portrays a world in which spads (special advisors) and spin doctors are in charge of policy-making — a view promoted by Westminster journalists, who are flattered by the depiction. But the news cycle actually has little do do with long-term policy-making.

Now, more than ever, the bureaucracy marches to its own internal rhythm, and quietly determines policy on issues as diverse as Europe, the environment, and criminal justice.

Looking ahead to the next federal budget

Filed under: Cancon, Economics, Government — Tags: , — Nicholas @ 08:29

In the Globe and Mail Economy Lab, Stephen Gordon thinks he can accurately predict the overall shape and content of the next budget:

The main features of the expenditure side of next year’s 2013-14 federal budget should be fairly easy to predict:

  • Transfers to persons will be about 4 per cent of GDP, and future projections will be consistent with this share.
  • Transfers to other levels of government will be about 3.2 per cent of GDP, and future projections will also be consistent with this share.
  • Direct program spending will be at or just above 6 per cent of GDP, and this share will be projected to decline throughout the forecast horizon.

The reason we can make these predictions with a certain amount of confidence is that these paths were set out by the Conservative government several years ago, and they have shown little sign of wanting to deviate from them.

Even if they wanted to — and it can be fairly imagined that they do — cutting transfer programs would generate a certain amount of political blowback from the people and provinces that are on the receiving end. The Conservatives have doubtlessly concluded that limiting the rate of growth of transfer payments to that of the economy — which is the same as keeping them at a constant share of GDP — is probably the most restraint they can impose without incurring lasting political damage.

Reason.tv: Remy explains health care mandates

Filed under: Economics, Government, Health, USA — Tags: , — Nicholas @ 00:06

March 28, 2012

“[T]he Government of Canada is [like] a big national insurance company with a side business as a tax collector for the provinces”

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 10:17

Kevin Milligan in the Globe and Mail:

The first question to ask of any budget announcement is whether the dollars are recurring or one-time only. If we change a tax that brings in $1-billion a year, the budget changes not just this year but in future years as well. […] Politicians and commentators often choose the time frame that suits their current argument. Confusion results. A good economist keeps her eye open to these tricks and tries to ensure we compare numbers on similar time-frames.

Next up is properly adjusting future dollars to account for inflation and our ability to pay. Dollars spent in the future are different than dollars spent now. Imagine that inflation averages 2 per cent a year, and inflation-adjusted economic growth is 1.5 per cent a year on top of that. In just 20 years, prices will increase by 50 per cent and the size of our economy — and our ability to pay for programs priced in nominal dollars — will double.

[. . .]

As a final note, it is always useful when crunching the numbers to keep in mind what the Government of Canada actually does with our tax dollars. Transfers to individuals for insurance programs (such as Employment Insurance and Old Age Security) are 25 per cent of spending. Transfers to provinces and territories (health and other transfers) are another 20 per cent. Interest takes a further 11 per cent. The best way to think of the Government of Canada is a big national insurance company with a side business as a tax collector for the provinces. (This is only slightly different from the US Government, which has been called by Ezra Klein an insurance company with a standing army.) Everything else the Government of Canada does — from fisheries management to culture to the military — takes the remaining 44 per cent. Making any change to the trajectory of total spending when insurance and inter-government transfers are both projected to grow rapidly requires very large changes to that residual 44 per cent.

The “Greatest Generation”, then the “Luckiest Generation”, and now the bill comes due

Filed under: Economics, Government, Politics — Tags: , , , , , — Nicholas @ 10:01

John Kay on the luck of the Baby Boomers:

I belong to a lucky generation: too young to have experienced the Depression, or the second world war, or postwar austerity. The first political figure I recognised was Harold Macmillan, who told voters they had never had it so good.

His statement was true, if foolish, and my contemporaries and I benefited. The government paid us to go to university. We took for granted we would choose between attractive job offers. I was quickly appointed to a post from which it was practically impossible to be fired and which offered a pension scheme with generous, index-linked benefits. I bought a flat with a mortgage whose value was wiped out by inflation. By the time I was paying a higher rate of income tax, the level had been cut from 83 per cent to 40 per cent. My life expectancy is several years longer than my father’s, and I have already considerably exceeded the age at which his father died.

If young people today want to attend university, they will have to pay for tuition and borrow to meet living expenses. When they graduate, they face a much more competitive job market. Few careers will offer the job security once characteristic of middle-class employment. Defined benefit schemes have almost disappeared from the private sector, and public sector pensions are to be substantially less generous. Tax rates must rise, partly to pay for the care and medical treatment I will demand as senility advances. The only financial consolation for the next generation is the windfall when we leave them our houses.

The first half of the baby boom generation certainly were the luckiest cohort in human history. The second half of that generation didn’t do quite as well, the Gen X kids and the Millennials are going to be stuck with most of the bill for all the government-provided goodies that the early boomers have arranged for themselves. Pensions and healthcare, in particular, will have to be reined in for younger workers … just as the bulk of the early boomers have squeezed all the juice out of the system.

Aside from retroactively cutting back the benefits to baby boomers, the only other way to mitigate the financial burden is growth, but most governments in the west are pursuing goals that will not help and in many cases will retard economic growth.

March 27, 2012

Reason.tv: Obamacare goes to the Supreme Court

Filed under: Government, Law, Liberty, USA — Tags: , , , , — Nicholas @ 14:33

Does the fate of a federal government with limited powers rest in the hands of Supreme Court Justice Antonin Scalia? And if so, will he rule against broad federal powers (as he did in the Gonzales case) or in favor of the feds’ right to regulate just about anything (as he did in the Raich case)?

The Supreme Court case over The Affordable Care Act, a.k.a. Obamacare, “is certainly the most important case on the reach of federal power in 50 years” says attorney and legal scholar Timothy Sandefur of the Pacific Legal Foundation. “The constitutional principle of where is the line drawn on federal power — that’s a matter that our children and grandchildren will have to live with.”

The ruling will come sometime in early June, predicts Sandefur, who tells Reason.tv that the Affordable Care Act raises multiple constitutional issues: Can part of the law be struck down and other upheld? Is the “individual mandate,” which forces all Americans to purchase insurance as a condition of simply being alive, legal? Does the law’s massive expansion of Medicaid shred the right of states to govern their own finances?

The Quebec student protests as a harbinger of the coming “entitlement wars”

Filed under: Cancon, Economics, Education, Government — Tags: , , , — Nicholas @ 10:30

Bill Morrison in the National Post:

This past week, the streets of Quebec have been full of marching students, displaying a degree of anger and solidarity the likes of which have not been seen in Canada for many years. The fact that this protest is focused on naked self-interest — maintaining the province’s ridiculously low tuition fees rather than world peace, global poverty or even the inchoate agenda of the Occupy movement — speaks volumes about the emergence in Canada of an inter-generational struggle over entitlements.

Everyone knows that a clash over entitlements is in the offing in Canada as a whole. It may come, as the political right argues, because government coffers are close to empty, and cutbacks have to be made. It may be, as the left suggests, that governments have been hijacked by low-tax, pro-corporation policies, and no longer care about equality and social safety nets. It even could be, as still others argue, that the public usage of our core institutions — hospitals, colleges and universities — has simply outstripped our capacity or willingness to pay.

As for the specific example of tuition, the simple fact is that university education is underpriced in Canada, particularly for the middle and upper classes that benefit from impressive tax savings along the route of getting their children to and through university. It is a much smaller subset of the total student body — children from low-income families — that deserves greater financial support and attention. Instead, and in a mix of self-interest and a commitment to equality, students demand the same concessions for all.

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