Quotulatiousness

September 12, 2011

What is “the biggest European policy mistake since Britain and France let Hitler have the Sudetenland”?

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

For the record, I don’t actually think Europe would be better off with a single federal government, but Walter Russell Mead thinks the big mistake was attempting an economic union without a political union to match:

What is worrying investors worldwide is the evident intellectual and political bankruptcy of Europe. The Europeans are not stupider than other people, but they face deep structural economic and political problems that their institutions are hopelessly inadequate to solve. Creating a monetary union without a true federal government is looking more and more like the biggest European policy mistake since Britain and France let Hitler have the Sudetenland.

The current crisis is the result of a decade of policy failure. Greece should never have been allowed into the euro; prudent leaders would have checked its statistics, discovered the blatant frauds with which the Greeks sought to conceal the true state of their affairs, and told the country politely but firmly to come back when it was ready. Following that initial blunder, Europe failed to take note in any serious way of the serious distortions that were caused by suddenly reducing interest rates in Greece and other peripherals to near-German levels. Beyond that, alarm bells should have been ringing as it became clear that Greece and a number of other countries were treating their suddenly lower interest costs as found money. They were spending the windfall rather than taking advantage of the once in a lifetime opportunity to reform their economies in preparation for life under a monetary union with countries like Germany. If Europe’s institutions were up to the job, the warning signs would have been noticed and corrective steps taken years ago.

September 11, 2011

The Canada Pension Plan and moral hazard

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 11:37

An interesting post at Worthwhile Canadian Initiative looks at the overlooked failure in pension markets. I found this bit of information to be quite interesting, as it addresses a conversation I had with Dark Water Muse a few months ago:

Governments provide pensions in one of two ways. Pay As You Go (PAYG) plans use current contributions to fund current benefits. The Canada and Quebec Pension Plan were, when they were first introduced, PAYG plans. The moral hazard risk a worker faces with these plans is political: a politician will design the plan so as to maximize his or her chances of re-election.

The design of Canada and Quebec Pension Plan has created large benefits for the first generation of recipients (current voters) and a much lower rate of return for future recipients (future voters). Now those gainers were the generation that entered the labour market in the Great Depression and fought in World War II, so one could argue that the windfall gain they experienced was merited on equity grounds. The point here is merely that the design of PAYG pension plans reflects the interests of the designers (for re-election) as well as the interests of the contributors and recipients.

The Canada and Quebec Pension Plans are now transitioning into fully-funded plans. The Canada Pension Plan Investment Board was, as of June 30th 2011, managing $153 billion in assets. Some is managed directly by the board, the rest is managed by “partners” ranging from Istanbul-based Actera Group to New York-based Welsh, Carson, Anderson & Stowe. I suspect that the CPP, roaming the world with billions to invest, is able to negotiate low management fees, and there must be savings associated with economies of scale in investing. But the possibility of moral hazard — someone getting rich by diverting away a tiny percentage of the return on $153 billion, or a politician exerting pressure on the CPP investment board to make electorally-sound investments — remains.

In sum, while private pension markets suffer from moral hazard, it’s not clear that governments can solve the problem.

In my discussion with DWM, I claimed that the CPP was a PAYG system (in extreme examples, like the US social security system, this can be compared to a Ponzi Scheme), while DWM — claimed that the system was fully funded from investments. As the quoted section above shows, we each had part of the answer.

It’s hard to believe that the CPPIB (the organization that handles the investments of the CPP) can remain immune to government meddling — buy this company’s stock, invest in that company’s risky-but-located-in-a-marginal-riding new venture, etc. As long at the CPPIB can remain independent of political pressure, the system might work.

September 7, 2011

Brendan O’Neill – The Riots: A Mob Made By The Welfare State?

Filed under: Britain, Government, Liberty, Media — Tags: , , , , , — Nicholas @ 12:14

How much more will “green” renewable power cost?

Filed under: Britain, Economics, Environment, Government, Technology — Tags: , — Nicholas @ 09:37

In short, lots more than ordinary power generation:

The Telegraph has obtained a policy document, dated July, that seems to suggest that the government is considering a walk away from the most expensive renewables — and now we can see the full copy online. Two No 10 advisers challenge the Department of Energy and Climate Change’s utopian cost predictions, and say energy bills will be much bigger than we’ve been told.

What isn’t in contention is that energy itself will be much more expensive. DECC’s argument is that we’ll all start insulating our homes more — so our utility bills won’t reflect the higher per-unit energy costs. No 10’s energy expert thinks this is nonsense.

The Cameron advisors also suggest that government policy should be “open” to ditching some of the most expensive renewables — such as offshore wind power.

What’s the real cost of wind and solar?

     The former power director of the National Grid, Colin Gibson, now estimates that the lifetime per unit cost of onshore wind is £178 per megawatt hour (MWh), and offshore wind at £254/MWh. Nuclear is £60/MWh. The figures DECC provides don’t account for the huge additional transmission costs of wind.

     Note how much more expensive reality is than the clean, green vision. Government figures reckoned onshore wind cost £55/MWh and offshore wind £84/Mwh [. . .] compared to gas at £44/Mwh. Politicians seeking to dump the renewables policy could argue that green-minded civil servants sold them a pup. They’d be right.

September 6, 2011

Stephen Gordon: no case for stimulus in Canada (yet)

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 12:15

As he points out in the article, Canadians who are calling for the federal government to indulge in US-style stimulus spending are not paying attention to the Canadian economy:

Employment in the U.S. is far below its pre-recession levels, and employment in the construction sector has been hit particularly hard. So there is a strong case to be made for a U.S. program of infrastructure spending — and many U.S. observers are making that case.

Neither of these conditions holds in Canada. Although unemployment rates have yet to return to pre-recession levels [. . .], the number of jobs lost during the recession has been recovered, and July employment levels were 1 per cent above their pre-recession peak.

September 4, 2011

California is apparently not in deep enough trouble

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , — Nicholas @ 10:44

Otherwise, there’s no explanation for yet another extension of the state’s regulatory reach into the lives of everyday citizens. The most recent example is a bill that (at least on first look) appears to mandate workers’ compensation coverage, detailed pay slips (with all deductions clearly indicated), and paid vacation time for babysitters. Coyote Blog would like to see even more of this kind of thing:

I know this is exactly the kind of thing you would expect me to oppose, but I have decided this is exactly the kind of thing California needs. I am tired of average citizens passing crazy requirements on business without any concept of the costs and injustices they are proposing, and then scratch their head later wonder why job creation is stagnant.
I want to propose that California do MORE in this same vein. Here are some suggestions:

  • Every household will have to register for a license to conduct any type of commerce, a license to occupy their house, and a license to hire any employees. Homeowner will as a minimum have to register to withhold income taxes, pay social security taxes, pay unemployment insurance, pay disability insurance, and pay workers comp insurance.
  • Households should have to file a 1099 for every payment they make to contractors
  • All requirements of Obamacare must be followed for any household labor, including payment of penalties for even part-time labor for which the homeowner does not provide medical insurance
  • No alcohol may be purchased by any individual without first applying for and receiving a state liquor license
  • No cigarettes may be purchased by any individual without first applying for and receiving a state cigarette license
  • No over the counter drugs may be purchased by any individual without first applying for and receiving a state over the counter drug license

And the list goes on. But they’re not just being randomly generated: they’re all things that ordinary businesses in California already have to do.

September 2, 2011

US flood insurance is “a veritable bucket of fail”

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

Felix Salmon on the state of US flood insurance:

Ben Berkowitz has a big report on the the National Flood Insurance Program — something which is a veritable bucket of fail. In a nutshell, it undercuts private insurers and therefore is the only game in town; it insures only a small minority of homeowners; and it loses gobs of money. In September 2005, the NFIP was $1.5 billion in hock to the federal government; that number has now ballooned to $21 billion, and is certain to rise further.

There’s a simple answer to all these problems: let the NFIP raise its rates. And I don’t understand why it’s not being allowed to do so. If the rates rose, then that might allow private insurers into the flood-insurance game, giving consumers a choice and helping to get the word out about how insuring your home against flood damage is a really good idea. The NFIP could become profitable, and thereby start paying back all the money it owes. And while homeowners are quite price sensitive when it comes to flood insurance, the fact is that so few homeowners take out flood insurance right now that the number would be unlikely to fall dramatically if rates went up to a reasonable level.

September 1, 2011

“It is rather amazing how fast Solyndra wasted over half a billion US taxpayer dollars”

Filed under: Environment, Government, Technology, USA — Tags: , , , , — Nicholas @ 09:34

Mike “Mish” Shedlock looks at the breakneck pace of loss at Solyndra, a solar power company that just went bankrupt:

The federal government should get out of the business of picking technology and “green” winners. Government backing of alternate energy companies has been nothing short of disastrous.

A solar energy firm touted by the administration in 2010 as a as a “gleaming example of green technology” today announced bankruptcy. 1,100+ employees will be fired.

[. . .]

The “seen” math is simple enough. $535 million divided by 1,100 is roughly $486,363 per job saved, now job lost.

That is just the “seen” consequence. The “unseen” consequences are not directly calculable but by giving Solyndra money, other companies that the free market would have preferred have been harmed, perhaps permanently harmed.

Although Obama clearly rushed this pathetic company for a nice photo-op, this is not a simple case of the president failing to do his homework as the GAO implies. The government has no business promoting this kind of crap in the first place.

In this case, it is rather amazing how fast Solyndra wasted over half a billion US taxpayer dollars, so fast I suspect fraud.

August 31, 2011

Some good advice to young law enforcement employees

Filed under: Government, Humour, Law — Tags: , — Nicholas @ 16:09

Ken at Popehat used to be a 26-year-old federal prosecutor. He learned a few things on the job:

But even at 26 I had a certain rudimentary old-mannish quality, and it occurred to me to ask — does that sound too good? So during lunch I wandered into the office of the U.S. Attorney — who had been my supervisor in rookie row not long before — to talk about it.

He listened sympathetically. Then he told me. “Ken,” he told me, “if your reaction to a proposal is “HOLY SHIT, THAT SOUNDS LIKE FUN,” then as a government lawyer and member of law enforcement, you almost certainly shouldn’t be doing it.”

It was a hard rule, but one that served me well for the rest of my government career. It helped me avoid some foolish cinematic flourishes, some bad but tempting decisions, and some social events. (Take, for instance, the local ATF’s notorious big-guns-and-barbecue-in-the-desert gatherings. Holy shit, that sounds like fun, doesn’t it? Yeah. Never attend a desert barbecue-and-gun-extravaganza by a federal agency that vacillates between “WHOOOOOOOOOOOOOO FUCK YEAH” and “Hey guys, watch this!” as a motto.)

Regrettably, many in law enforcement do not follow this simple rule. So some cops can be induced to do extremely foolish things — things that will shatter the constitutional rights of citizens, things that will expose them to vast liability, things that will threaten innocents with death — while under the influence of toys, cameras, celebrities, and tactical plans that wouldn’t make the table read in an A-Team sequel.

The “official” start of the Cold War: 5 September, 1945

Filed under: Cancon, Government, History, Liberty — Tags: , , , — Nicholas @ 09:28

George Jonas, in a review of Mark Steyn’s latest book, gives a thumbnail sketch of the real trigger event that started the Cold War:

Sixty-six years earlier, another writer put together a manuscript of sorts to let Western readers know they were headed for hell in a hand-basket. He wasn’t in Steyn’s league as a wordsmith, although he did write a non-fiction bestseller and win a Governor General’s Award for a novel called The Fall Of A Titan. But far from making the apocalypse amusing, Igor Gouzenko could make a slapstick comedy apocalyptic. No two writers were less alike, yet their work carried a similar message.

The Cold War began on a Wednesday, a few minutes after 8 p.m., on September 5, 1945. This was when a young, slight, nondescript man closed the door of an embassy building on Charlotte Street and walked out into the humid Ottawa evening. He looked a little bulky for a reason. He carried 109 documents under his shirt.

During August, 1945, while the atomic bombs were exploding over Hiroshima and Nagasaki, Gouzenko had been discussing his defection with his wife Svetlana in their small apartment on Somerset Street. As a cipher clerk, Gouzenko knew a great deal about a Soviet spy ring operating through the office of GRU (military intelligence) Colonel Nikolai Zabotin. The aim of Zabotin’s spy ring was to secure atomic secrets. Gouzenko’s tour of duty in Ottawa was ending, and he feared that being privy to such information would reduce his chances of survival in Moscow. In self-defence, he triggered the Cold War.

The thing was damn hard to trigger. When it came to international intrigue, Canadians were wet behind the ears. Having just concluded a victorious war, they resisted the idea that they were at war again, this time with their former comrades-in-arms. Gouzenko knew that his tale might sound far-fetched, and carried documents with him for proof.

For two harrowing days, with his pregnant wife and their two-year-old son in tow, Gouzenko tried to convince incredulous Canadian journalists and Ministry of Justice officials that he was worthy of a hearing. Mackenzie King’s government couldn’t make up its mind about the defectors, and for a brief period actually considered returning them to the Soviets. Messengers bring bad tidings at their peril.

Gouzenko didn’t start the Cold War; he just warned us to do something, or get ready for Armageddon. So we did something, but 66 years later we’ve another Cassandra at the doorstep, telling us it wasn’t enough.

August 30, 2011

QotD: Casinos are a neon-decorated IRS

Filed under: Government, Humour, Liberty, Quotations — Tags: , , , — Nicholas @ 12:07

. . . no phenomenon of nature could possibly be as strange as the alternative reality one encounters entering Wendover, Nevada. In that physical regime, hotels and restaurants are connected to—and often concentric with—caverns with mirrored ceilings, walls, and columns, making it difficult to find your way across the room. Serried ranks of electronic slot machines are clung to by half-starved-looking wights — the cigarettes in their hands nothing but long cylinders of gray ash — worshipping runes that appear when they insert a coin and watch the lights and listen to musical notes that would make a Pac-Man fan start screaming, tearing his hair, and running for the roof with a rifle.

To be sure, there are other kinds of gambling going on. I saw a poker room, roulette wheels, and a genuine James Bond baccarat table. But they were truly lost in a great labyrinth of electronic slots. I was surprised not to see slot machines on a free wall of the men’s room.

I’d seen all of this before, mind you. I was in Las Vegas last year, and it was my second time. I first saw it only a couple of years after Bugsy Siegal did. And I gotta confess to youse guys, I just don’ geddit.

What I mean is, there are a number of points of view that various human beings have, which I am forced to accept purely intellectually. I know there are men who find other men sexually attractive, but I don’t really understand it. I know there are grownup people who seem to go into shock when they discover that their aged parents still enjoy sex — I think my mother would have lived longer if she’d had a boyfriend. And I know — but do not understand that folks like to hand their hard-earned money to casino owners who already have plenty of it.

Casinos are like a neon-decorated IRS.

L. Neil Smith, “The Past That Never Was — The Future That Will Never Be”, Libertarian Enterprise, 2011-08-28

August 29, 2011

Kaus: Ten things Obama should have done differently

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

Mickey Kaus thinks the President would have been much better off (and the US economy too) if he’d done several things differently:

Excessively well-sourced Obama boosters are now channeling, not just White House spin but White House self-pity. Both Ezra Klein and Jonathan Alter wonder aloud why our intelligent, conscientious, well-meaning, data-driven President is taking a “pummeling.” ”What could Obama have done?” (Klein) “What, specifically, has he done wrong .. .?” (Alter)

They’re kidding, right? There are plenty of things Obama could have done differently. Most of these mistakes were called out at the time. Here, off the top of my head, are ten things Obama could have done:

[. . .]

3. Made the UAW take a pay cut. Whoever else is to blame, the UAW’s demands for pay and work rules clearly contributed to the need for a taxpayer-subsidized auto bailout. To make sure that future unions were deterred from driving their industries into bankruptcy, Obama demanded cuts in basic pay of … exactly zero. UAW workers gave up their Easter holiday but didn’t suffer any reduction in their $28/hour base wage. Wouldn’t a lot of taxpayers like $28 hour jobs? Even $24 an hour jobs?

[. . .]

5. Not pursued a zombie agenda of “card check” and “comprehensive immigration reform”–two misguided pieces of legislation that Obama must have known had no chance of passage but that he had to pretend to care about to keep key Democratic constituencies on board. What was the harm? The harm was that these issues a) sucked up space in the liberal media, b) made Obama look feckless at best, delusional at worst, when they went nowhere; c) made him look even weaker because it was clear he was willing to suffer consequence (b) in order to keep big Democratic constituencies (labor, Latinos) on board.

6. Dispelled legitimate fears of “corporatism” — that is, fears that he was creating a more Putin-style economy in which big businesses depend on the government for favors (and are granted semi-permanent status if they go along with the program). I don’t think Obama is a corporatist, but he hasn’t done a lot to puncture the accusations. What did electric carmaker Tesla have to promise to get its Dept. of Energy subsidies? Why raid GOP-donor Gibson’s guitars and not Martin guitars? We don’t know. At this point, you have to think the president kind of likes the ambiguity–the vague, implicit macho threat that if you want to play ball in this economy, you’re better off on Team Obama. That’s a good way to guarantee Team Obama will be gone in 2013.

Oh, and for a bonus bit of unwelcome news for President Obama, his uncle has just been arrested for drunk driving. His illegal alien uncle, who now faces deportation.

August 27, 2011

World collapse explained in three minutes

Filed under: Economics, Europe, Government — Tags: , — Nicholas @ 13:39

US government moves swiftly to crush guitar industry

Filed under: Bureaucracy, Government, Law, USA — Tags: , , , — Nicholas @ 09:46

The US federal government, not satisfied with the state of the economy, is now targeting smaller industries for regulatory SWAT raids and asset confiscation:

The Justice Department raided the Memphis and Nashville offices of a guitar manufacturing company this week, seizing several pallets of wood, electronic files and guitars as part of a crackdown on illegally harvested hardwoods from protected forests, The Wall Street Journal reported.

But Henry Juszkiewicz, the chairman and chief executive of Gibson Guitar, defended his company’s manufacturing policies and accused the Justice Department of overreaching.

“The wood the government seized Wednesday is from a Forest Stewardship Council certified supplier,” he said in a statement to the newspaper, suggesting the Feds are using the aggressive enforcement of overly broad laws to snare the company.

The Justice Department refused to speak to the newspaper.

The raid prompted Iowahawk to connect the dots between this raid and the “Fast and Furious” operation:

Today’s uncovering of secret multi-agency program for shipping illegal Gibson guitars to Mexican drug cartels left red-faced officials of the U.S. Department of Justice scrambling for an explanation amid angry calls for a Congressional investigation.

“I have ordered all agency personnel to fully cooperate in any Congressional inquiries, including all reasonable document request, as soon as we can redact them with Sharpie pens and lighter fluid,” said U.S. Attorney General Eric Holder.

The secret program came to light early this morning in the border town of Nogales, Arizona, after what was described as a wild battle of the bands between members of the Sinaloa cartel and Los Zetas, two of Mexico’s most notorious violent drug gangs.

“Usually these guys are armed with Mexican Strats and Squires, Epiphones, small caliber stuff like that,” said Pedro Ochoa, 36, an eye witness to the sonic melee. “This time they were packing the heavy firepower.”

The steady barrage of power chords and piercing solo attacks attracted the attention of nearby U.S. Border Patrol agents, who arrived at the scene just as Los Zetas broke into Led Zeppelin’s ‘Immigrant Song.’ By the time the dust had cleared, U.S. Border Patrol Agent Oscar Jimenez was found in a catatonic state of headbanging. He was later flown to University of Arizona Hospitals, where his condition is listed as seriously rawked.

Jon, my former virtual landlord, sent me a link to the press release from Gibson and a link to this Wall Street Journal article with more information.

John Thomas, a law professor at Quinnipiac University and a blues and ragtime guitarist, says “there’s a lot of anxiety, and it’s well justified.” Once upon a time, he would have taken one of his vintage guitars on his travels. Now, “I don’t go out of the country with a wooden guitar.”

The tangled intersection of international laws is enforced through a thicket of paperwork. Recent revisions to 1900’s Lacey Act require that anyone crossing the U.S. border declare every bit of flora or fauna being brought into the country. One is under “strict liability” to fill out the paperwork — and without any mistakes.

It’s not enough to know that the body of your old guitar is made of spruce and maple: What’s the bridge made of? If it’s ebony, do you have the paperwork to show when and where that wood was harvested and when and where it was made into a bridge? Is the nut holding the strings at the guitar’s headstock bone, or could it be ivory? “Even if you have no knowledge — despite Herculean efforts to obtain it — that some piece of your guitar, no matter how small, was obtained illegally, you lose your guitar forever,” Prof. Thomas has written. “Oh, and you’ll be fined $250 for that false (or missing) information in your Lacey Act Import Declaration.”

August 26, 2011

Unexpectedly over-used

Filed under: Economics, Government, Media, USA — Tags: , , , , — Nicholas @ 09:05

Jim Geraghty explains why the word “unexpectedly” has become a punchline:

For about three years now, conservative bloggers have chuckled at how frequently the unveiling of bad economic news comes with the adverb “unexpectedly” in media reports. As Instapundit’s Glenn Reynolds, Michael Barone, and others have often asked, unexpected to whom?

“I think it’s a combination of cognitive dissonance, the terra nova nature of the post-bubble economy, and a healthy dose of partisanship,” suggests Ed Morrissey, who has blogged about the ubiquitous adverb regularly at HotAir.com.

Perhaps the perpetual surprise reflects a media desire to focus on pockets of growth or prosperity — at least with a Democrat in the White House. In a widely diversified $14 trillion economy, one can almost always find some areas of economic improvement.

Certainly, a media that wanted to paint a more dire portrait of the economy would have no shortage of material to work with. There’s considerable evidence that America’s problems in job creation are much worse than the most widely cited numbers would indicate.

For example, President Obama spent much of the past year touting the number of consecutive months of private-sector job growth that the country had enjoyed. But that boast comes with some asterisks. Traditionally, the population of American workers grows each month, and while economists differ a bit on precisely how many new jobs are needed each month just to keep the unemployment rate stable, it’s often more than the figure Obama cites. The Heritage Foundation puts the figure at 100,000 to 125,000; some argue that any serious reduction of the unemployment rate will require adding 200,000 jobs per month. Only four months out of the past 17 have seen at least 200,000 jobs added; some months of growth have been minimal, such as January 2010, when the economy added 16,000 private-sector jobs,. Nonetheless, like a bloop single keeping a batter’s hitting streak going in baseball, meager months of job growth permit Obama to keep bragging about how many consecutive months he has presided over private-sector job growth.

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