December 15, 2011
James Delingpole on Great Britain, the Green Movement, and the End of the World
December 14, 2011
Revolt in a Chinese fishing village
Local unrest is hardly uncommon in China, but unrest of this nature is almost unheard of:
For the first time on record, the Chinese Communist party has lost all control, with the population of 20,000 in this southern fishing village now in open revolt.
The last of Wukan’s dozen party officials fled on Monday after thousands of people blocked armed police from retaking the village, standing firm against tear gas and water cannons.
Since then, the police have retreated to a roadblock, some three miles away, in order to prevent food and water from entering, and villagers from leaving. Wukan’s fishing fleet, its main source of income, has also been stopped from leaving harbour.
The plan appears to be to lay siege to Wukan and choke a rebellion which began three months ago when an angry mob, incensed at having the village’s land sold off, rampaged through the streets and overturned cars.
Of course, one of the reasons we rarely hear about protests of this nature is that the Chinese government actively suppresses media coverage. This is only coming to our attention because western journalists are there and able to communicate with their employers.
H/T to Jon, my former virtual landlord, who commented “You have to admire these 20,000 future organ donors for their intestinal fortitude”.
December 12, 2011
Defining crony capitalism
Bill Frezza explains what crony capitalism is and how it differs from free market capitalism:
If defenders of capitalism hope to win over fair-minded fellow citizens who are honestly upset and confused, we need to define these terms and answer some basic questions. In what ways are Crony Capitalists and Market Capitalists the same and in what ways are they different? What makes the former immoral and the latter virtuous? Why are Crony Capitalists a threat to democracy and prosperity while Market Capitalists are essential to both? How is it that ever larger numbers of Market Capitalists are being corrupted, turning into Crony Capitalists? And what can we do to reverse that trend?
All capitalism is driven by greed — the desire to not only achieve economic security, but to amass pools of capital beyond one’s basic needs. This capital can fuel the kind of conspicuous consumption that offends egalitarians. But it also finances investments in new products and businesses, without which the economy cannot grow. [. . .]
What makes Crony Capitalists different is their willingness to use the coercive powers of government to gain an advantage they could not earn in the market. This can come in the form of regulations that favor them while hindering competitors, laws that restrict entry into their markets, and government-sponsored cartels that fix prices, grant monopolies, or both.
Crony Capitalists are also more than happy to help themselves to money from the public treasury. This can come from wasteful or unnecessary spending programs that turn government into a captive customer, subsidies that flow directly into their coffers, or mandates that force consumers to buy their products.
[. . .]
Beyond these obvious Crony Capitalists lies a slippery slope designed to attract and entrap Market Capitalists: the tax code. By setting nominal corporate tax rates high while marketing tax breaks to specific companies and industries, Congress assures itself a steady stream of campaign contributions from companies looking to lighten their tax load. While there is no shame in reducing one’s tax burden from 35% to a more globally competitive 20%, is it any wonder that people get sore when some extremely profitable corporations manage to get their tax burden down to nearly 0%?
December 10, 2011
“Green is the easiest virtue”
Rex Murphy looks at how what he calls Dalton McGuinty’s “reasonably competent government” could fall for the snake oil salesmen of every shabby Green initiative going:
The Ontario government, and Premier McGuinty in particular, gave themselves over to this madness, becoming overzealous crusaders, because the cause was green. And, sadly, there seems to be no other area of public policy in which fitful enthusiasms, pie-in-the-sky thinking, under-researched proposals and the mere hint of possible benefit get so respectful a response and are shielded — almost as if by magic — from the criticisms and analysis that would greet proposals from any other policy area whatsoever. Call it green and every other consideration goes out the window. Start phantom carbon markets, subsidize a Solyndra, put gardens on roofs . . . green will rationalize every cost and subdue every sane objection.
For example: During the early day’s of McGuinty’s determination to “make Ontario a world leader in green technology,” it was interesting to watch him and his government studiously ignore the articulate criticisms and protests from some Ontario landowners. Now any other project inspiring such protests would naturally instigate the usual relentless series of environmental studies that have become so common in our time. But — windmills being “green initiatives” — naturally it was the reverse. The landowners who protested were pilloried as being the worst of the NIMBY crowd, just selfish types safeguarding their little nooks against the common green future.
Green is the easiest virtue. All it takes in most cases for politicians is simply to say the word often enough and whatever they propose — for a time — gets a pass. Who would question McGuinty against those “selfish” landowners. Wasn’t Dalton moving towards a greener world? Enough then. No studies required. No review of the windmills (until election time, that is, when suddenly Ontario voters were told, in effect, the science “wasn’t in” on what secondary effects windmills might have). Question the contracts for solar power? Impossible. Solar power is “clean.”
December 9, 2011
Basic rule of political economics: subsidies result in higher costs
Virginia Postrel explains how federal funding to university students has created price inflation among universities:
As veteran education-policy consultant Arthur M. Hauptman notes in a recent essay: “There is a strong correlation over time between student and parent loan availability and rapidly rising tuitions. Common sense suggests that growing availability of student loans at reasonable rates has made it easier for many institutions to raise their prices, just as the mortgage interest deduction contributes to higher housing prices.”
It’s a phenomenon familiar to economists. If you offer people a subsidy to pursue some activity requiring an input that’s in more-or-less fixed supply, the price of that input goes up. Much of the value of the subsidy will go not to the intended recipients but to whoever owns the input. The classic example is farm subsidies, which increase the price of farmland.
[. . .]
This doesn’t mean that colleges capture all the aid in higher tuition charges, any more than capital-equipment companies get all the benefit of investment tax credits. But it does set up problems for two groups of students in particular. The first includes those who don’t qualify for aid and who therefore have to pay the full, aid-inflated list price. The second encompasses those who load up on loans to fill the gaps not covered by grants or tax credits only to discover that the financial value they expected from their education doesn’t materialize upon graduation.
That’s the situation many young people find themselves in today, which is one reason for their anger. The other is a widespread feeling, which the recession has intensified, that higher education is unfairly insulated from the everyday competitive pressures most people have to cope with. Instead of having to find ways to operate more efficiently and deliver ever-more value without raising costs, the way private-sector managers do, college administrators seem able to pass higher and higher bills on to their customers and the public.
December 8, 2011
The Law of Misguided Subsidies
T.J. Rogers explains the latest corollary to the well-known Law of Unintended Consequences (for examples of that law in operation, see your local, regional, or national government):
Wall Street understands how to make money, up-market or down. “Margin Call” may fuel Occupy movement ire, but in creating mortgage-backed securities, Wall Street did nothing other than facilitate home-financing access to the next tier of less-qualified home buyers, as demanded by every president since Bill Clinton. After that, the bankers did exactly what their shareholders wanted: bundle those risky loans into securities, sell them to lock in the profits, and dump the risk right back onto the federal government — where it belonged.
My purpose is not to debate the morality of mortgage-backed securities but to update the Law of Unintended Consequences with the corollary Law of Misguided Subsidies: Whenever Washington disrupts a market by dumping subsidies into it, Wall Street will find a way to pocket a majority of the money while the intended subsidy beneficiaries are harmed by the resulting market turmoil.
Rogers also explains why so many “special Limited Liability Corporations (LLCs)” are getting into the solar power business — not the manufacturing side, but the retail side. The profit margins are obscene. If the government hadn’t set up the market to work this way with their subsidies, the profit margins would be much lower.
December 7, 2011
Time to end the “forced march” to Fiskalunion?
Patrick Hayes outlines the way European national leaders and unelected EU officials are steadily blocking any democratic influence over the future of Europe:
Missing from this deal-making has been the European public, which has been held in complete disregard; whether such a ‘forced march’ is acceptable to the European populace is deemed utterly irrelevant, a triviality, in the face of impending doom. After all, as Merkel reminded us recently, ‘nobody should take for granted another 50 years of peace and prosperity in Europe’. The need for such fundamental changes to Europe’s government and economic system are deemed to be beyond debate.
Even when raising the importance of the national sovereignty of their countries, European leaders do so by pointing out too much economic and fiscal integration would get in the way of solving the short-term crisis. There is little discussion of sovereignty as a matter of principle, as the basis upon which voters can hold politicians and technocrats to account. Actually asking the people directly what they want, through national referenda on any new treaty, is regarded as an unnecessary distraction from the urgent task of saving the Euro, to be avoided at all costs.
[. . .]
Once again demonstrating who is actually wearing the trousers in the partnership between the two wealthiest Eurozone countries, Merkel largely got her way. Only last week, Sarkozy was calling for a return to greater democracy in the European Monetary Union: ‘The reform of Europe is not a march towards supra-nationality’, he said. However, Merkel also had to water down her desire to haul naughty countries before a supra-national authority such as the European Court of Justice or a ‘super commissioner’ in Brussels. Instead, sanctions for breaches of the new Eurozone rules would be enforced internally within countries, who would adopt new laws promising they will obey EU rules.
Despite this, as is evident by a leaked document being circulated by EU Council president Herman Van Rompuy and to be discussed by senior EU officials today, the full arsenal of punitive measures for rule-breaking Eurozone members remains on the table. Van Rompuy suggests that bailed-out countries could be temporarily deprived of political voting rights in EU councils; pension reforms, social security systems, labour-market policy and financial regulations could be ‘harmonised’ across EU countries; and there could be ‘more intrusive control of national budgetary policies by the EU’. Development aid for poorer EU countries could be cut, too.
[. . .]
Whatever gets decided at this week’s summit, and whether the fiscal rules are accepted by all 27 EU nations or just by the 17 Eurozone members, it’s clear that greater intrusion into member countries’ national sovereignty by EU officials is the way the wind is blowing. Should countries overspend and breach EU rules, they may no longer be allowed to decide how they set their taxes, how much they can borrow, even the make-up of their budgets. Such decisions, fundamental to a country’s sovereignty, get ripped from the hands of the people living in the countries and their elected representatives, with decisions instead being forcibly guided by European technocrats in Brussels.
December 6, 2011
Guardian study finds that August rioters were motivated by Guardian editorials
Brendan O’Neill on the recent study, carried out by the London School of Economics and the Guardian:
Well, that’s convenient, isn’t it? A four-month Guardian/London School of Economics study into the riots that rocked English cities in August has found that the rioters were pretty much Guardian editorials made flesh. Concerned about government cuts, annoyed by unfair policing, shocked by social inequality and outraged by the MPs’ expenses scandal, it seems the young men and women who looted shops and burnt down bus stops weren’t Thatcher’s children after all — they were Rusbridger’s children, the moral offspring of those moral guardians of chattering-class liberalism.
This is a blatant case of advocacy research, of researchers finding what they wanted to find, or at least desperately hoped to find. For months now, the Guardian has been publishing articles arguing that the rioters were politically motivated, under headlines such as ‘These riots were political’ and with claims such as ‘the looting was highly political’ and the riots were a protest against ‘brutal cuts and enforced austerity measures’. And now, lo and behold, a Guardian study, Reading the Riots, has discovered that the rioters were indeed ‘rebels with a cause’, with 86 per cent of the 270 rioters interviewed claiming the violence was caused by poverty, 85 per cent arguing that policing was the big issue, and 80 per cent saying they were riled by government policies. Reading this study, we are left to marvel either at the extraordinary perspicacity of Guardian writers, or at their ability to carry out research in such a way that it confirms their own political preconceptions.
This study looks less like a cool-headed, neutral piece of sociology, and more like a semi-conscious piece of political ventriloquism, where rioters have been coaxed to mouth the political beliefs of the middle-class commentariat. This is not to say the Guardian and LSE researchers have been purposely deceitful, inventing evidence to suit a political thesis. Advocacy research is more subtle and less conscious than that. It involves a kind of inexorable pursuit of facts that fit and evidence that helps bolster a pre-existing conviction. So mental-health charities keen to garner greater press coverage always find high levels of mental illness, children’s charities that want to raise awareness about child abuse always find rising levels of child neglect, and now Guardian researchers who want to show that they’re right to fret about Lib-Con policies and outdated policing have found that these are burning issues amongst volatile English yoof, too.
December 5, 2011
Moral hazard invades the scientific sphere
Bill Frezza looks at an unanticipated consequence of pouring more government money into the sciences:
Science and the scientific method are the jewels in the crown of Western civilization. The ascertainment of facts, construction of reproducible experiments, development of falsifiable theories, impartial training and meritocratic advancement of practitioners, and — most importantly — integrity of the publication process by which a well established body of truth can be confidently assembled all underpin the respect accorded to science by the citizenry. In modern times, this respect translates into tax dollars.
Unfortunately, today those tax dollars are corrupting the process. Unprecedented billions are doled out by unaccountable federal and state bureaucracies run by and for the benefit of a closed guild of practitioners. This has created a moral hazard to scientific integrity no less threatening than the moral hazard to financial integrity that recently destroyed our banking system.
According to a report in Nature Reviews Drug Discovery, nearly two-thirds of the experimental results published in peer-reviewed journals could not be reproduced in Bayer’s labs. The latest special issue of Science is devoted to the growing problem of irreproducibility. The Wall Street Journal reports that Amgen, Pfizer, and others have abandoned research programs after spending hundreds of millions pursuing academic research that could never be replicated.
H/T again to Monty for the link.
December 3, 2011
December 2, 2011
Biggest general strike since 1926 becomes a “damp squib”
Some sense the evil hand of . . . Jeremy Clarkson?
It was to be the biggest strike in a generation. People were openly and unabashedly comparing Wednesday’s day of action over public sector pensions to the general strike of 1926. It was to bring Britain to a standstill. Mark a turning point in the battle against the cuts instigated by the spawns of the evil Iron Lady. Become a talking point that would strike fear into the cold heart of Cameron and pave the way to bigger, more decisive action.
Except, erm, the very next morning it had been almost completely forgotten. It barely registered as a blip on BBC Radio 4’s flagship Today programme. Newspaper coverage was on the whole sympathetic, but slight. None of the predicted chaos came to pass. Prime minister Cameron could quite safely dismiss the strike as a ‘damp squib’ and provoke few comments except from the usual suspects. People shrugged and went back to work. Far from being a Great Event like the 1926 strike that people would draw inspiration from in 85 years time, it was barely discussed. As my colleague Brendan O’Neill had anticipated, it all felt more like a ‘loud and colourful PR stunt ultimately designed to disguise the fact that, in truth, trade unions are a sad shadow of their former selves’.
Just as the PR flames were beginning to dim, however, enter Jeremy Clarkson, the cartoonish presenter of Top Gear, who sped to the rescue with a particularly naff joke about the strikers being shot in front of their families. Of course, he didn’t actually mean it. In the context of the programme, BBC1’s The One Show, his remarks were actually more a dig at the BBC: he had in fact been praising the strikers (‘London today has just been empty. Everybody stayed at home, you can whizz about… it’s also like being back in the 70s. It makes me feel at home somehow.) but then said, as it was the Beeb, he had to provide ‘balance’, making his now notorious quip: ‘Frankly, I’d have them all shot. I would take them outside and execute them in front of their families. I mean, how dare they go on strike when they have these gilt-edged pensions that are going to be guaranteed while the rest of us have to work for a living?’
Update: James Delingpole said he’s been flooded with interview requests since the strike began, largely because of the public’s reaction to the strike:
I got my answer from a chance remark made by Jeremy Vine after our interview. He was telling me about the phone-in he’d done the day before during the public sector workers’ strike and what had astonished him was the mood of the callers. If I remember what he said correctly, one of his studio guests was a nurse on a £40,000 PA salary, with a guaranteed £30,000 pension, and this had not gone down well with the mother-of-three from Northern Ireland struggling as a finance officer in the private sector on a salary of £14,000 and no pension to speak of. The callers were very much on the side of the private sector. In fact, they were on the whole absolutely apoplectic that privileged, relatively overpaid public sector workers with their gold-plated pensions should have the gall to go out on strike when the people who pay their salaries – private sector workers – have to go on slogging their guts out regardless.
[. . .]
After all, as Fraser Nelson reports, the strike itself was a massive flop. Only a minority of union members voted it for it; the turn-out was so poor that the unions felt compelled to send out hectoring letters accusing their membership of being “scabs”; the hospitals – and many schools – stayed open, Heathrow’s immigration queues actually got shorter. This was not the glorious day of action (or inaction) that the militants had hoped for. Nor did it fit into the BBC’s ongoing narrative that Osborne’s vicious cuts (what cuts, we ask) are causing such hardship and misery among the saintly frontline public sector workers who bravely rescue our cats from trees and smilingly change our bed pans that really a Labour government run by Ed Balls is the only option.
Not only were the strikes a failure in numbers terms, though, but more damagingly they were a failure in propaganda terms. As both Fraser Nelson and Jeremy Vine have noted, there really has been a shift in public mood. I remember not more than a year ago going on Vine’s show to state, somewhat provocatively that I’d rather toss my children out on the street than have them sponging off the taxpayer in the public sector, and of course the mainly left-leaning BBC audience went apoplectic. I think if I’d gone on and said the same thing today they would probably have been demanding a statue erected in my honour in Parliament Square.
November 30, 2011
Reason.tv: California vs. The Feds on medical marijuana
Is “innovation” today’s buzzword equivalent of “excellence”
Stephen Gordon thinks that the term “innovation” is well on the way to being just another way of saying “corporate handout”:
The theory of economic growth includes roles for such well-defined concepts as investment, human capital, research and development, productivity, and technical progress. I don’t know where innovation fits into this. My guess would have been that innovation is another name for R&D, but apparently there’s an ineffable distinction between innovation and R&D.
There are well-known policy instruments at the government’s disposal for increasing investment in human and physical capital and for increasing R&D activities. (Their relative effectiveness is another question.) But so far, the only proposals I’ve seen for an innovation policy consist of programs in which governments give money to deserving firms. This is problematic on a couple fronts.
Firstly, there are already many — too many — ‘economic development’ programs whose purpose is to channel public money to companies that enjoy the favour of the government. It’s hard to believe we need more of them.
