Quotulatiousness

April 18, 2011

Malinvestment the next big problem for China?

Filed under: China, Economics, Government — Tags: , , — Nicholas @ 09:54

Nouriel Roubini thinks that the Chinese central planners are missing the clues about overinvestment in their infrastructure binge:

China’s economy is overheating now, but, over time, its current overinvestment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible — most likely after 2013 — China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium.

Despite the rhetoric of the new Five-Year Plan — which, like the previous one, aims to increase the share of consumption in GDP — the path of least resistance is the status quo. The new plan’s details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to households, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.

China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-09 from 11 percent of GDP to 5 percent, China’s leader reacted by further increasing the fixed-investment share of GDP from 42 percent to 47 percent.

Thus, China did not suffer a severe recession — as occurred in Japan, Germany, and elsewhere in emerging Asia in 2009 — only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50 percent.

The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

H/T to Publius for the link.

April 17, 2011

China’s real estate bubble

Filed under: China, Economics, Government — Tags: , , , — Nicholas @ 09:24

April 11, 2011

Election bombshell in leak of Auditor General’s report?

Filed under: Cancon, Government, Law, Media — Tags: , , , — Nicholas @ 13:01

The Winnipeg Free Press has a potentially explosive article about a leak of part of the Auditor General’s report:

The Harper government misinformed Parliament to win approval for a $50-million G8 fund that lavished money on dubious projects in a Conservative riding, the auditor general has concluded.

And she suggests the process by which the funding was approved may have been illegal.

The findings are contained in the draft of a confidential report Sheila Fraser was to have tabled in Parliament on April 5. The report analyzed the $1-billion cost of staging last June’s G8 summit in Ontario cottage country and a subsequent gathering of G20 leaders in downtown Toronto.

It was put on ice when the Harper government was defeated and is not due to be released until sometime after the May 2 election. However, a Jan. 13 draft of the chapter on the G8 legacy infrastructure fund was obtained by a supporter of an opposition party and shown to The Canadian Press.

This could be the big break that the opposition parties have been waiting for: the leak is just about perfectly timed for maximum effect (just before the first debate), and the Auditor General has refused to discuss the news story or to give any interviews during the election campaign.

Wormme mashes up Theodore Sturgeon and Frederick Winslow Taylor

Filed under: Bureaucracy, Economics, Education, Government, Media — Tags: , — Nicholas @ 09:46

wormme read an older Atlantic article linked from Instapundit and had this to say:

Via Insty, this is one of the best things I’ve ever read. It eviscerates the myth of management competence the way that Joe Biden destroys the idea of government competence. But let’s take a step back from the specifics of business management. Look at all the other occupations that share management’s main trait.

Because in reality they’re all the same thing.

Here’s some fields in which competence is assumed, all evidence to the contrary: government, law, management, education, economics, scholarship, and all journalistic media.

Notice what they all have in common? As a primary feature?

Jaw flappin’, tongue waggin’, hot air spewin’ talkety talk talk words blah blah blah.

“Them that can, do. Them that can’t, teach.” And manage and report and govern. But you don’t hear that adage anymore, do you? The Talkers have brainwashed people into thinking they’re Doers as well.

I expect this is the thing that actually brings down Western Civilization. The Doers letting the Talkers take over the Doings.

The chin-waggin’ industries want “ex cathedra” status for their every mumble. How do they repay? By finding nothing but fault in the Doers: industries, energy production, “big box” stores, etc., all the way down to the evil of the Happy Meal.

This still wouldn’t have spelled civilization’s doom, had the Talkies remained apart. Journalism in particular is supposed to report on lies and wrongdoing. And they do so with gusto, when investigating Doers. Do you ever see them going after fellow Talkers like that? They’re in cahoots. Total…cahoots.

April 10, 2011

QotD: The real issue of the election

Filed under: Cancon, Government, Politics, Quotations — Tags: , — Nicholas @ 00:08

What is the issue in this election? Why, the same as in all elections, my libertarian self exclaims. In the last 45 years, the only question has been whether the government implementing the NDP’s policies will be Liberal or Conservative.

OK, my libertarian self exaggerates. Does it exaggerate by much? I don’t think so.

The NDP may do abysmally in federal elections, but the NDP’s ideas flourish. Canada is governed from the middle, yes, but the middle is on the left. The politicians who form our next government will be statist — socialists in all but name — because there are no other kinds running. Our statists may vary in degree, but not in kind. Since the 1960s, classical liberals or conservatives either haven’t entered the arena or changed their policies afterwards. They wouldn’t have had a chance otherwise.

Here’s the irony, though: If socialists called themselves socialists, they wouldn’t stand a chance either. Canadians are funny that way. They’ll buy nothing but socialist policies and practices, but never from socialists. Calling things what they are isn’t politically polite in Canada.

George Jonas, “In Canada, socialists don’t win elections. But their policies do”, National Post, 2011-04-09

April 9, 2011

Upheaval in Finnish politics?

Filed under: Europe, Government, Media, Politics — Tags: , , , , — Nicholas @ 00:03

Ilkka is enjoying the spectacle of the “right-thinking” (i.e., left-thinking) folks in Finland who are horrified at the rise of a new party:

Canada will have yet another federal election that will bring yet another minority government, and back in the old country, the parliamentary elections have begun with the first early voting days, and the right-wing protest party True Finns is predicted to grab a significant chunk of the parliamentary seats. The impotent tantrum of the SWPL greens and leftists, along with the media that they still mostly control, reacting to the cognitive dissonance of the working class abandoning them has certainly been a laugh riot. Besides, this whole surge illustrates how just one voice of just the right pitch can smash a sufficiently ossified, smug and complacent echo chamber to little shards of glass by its mere existence. One can only imagine what the Finland of the 1970’s would have been like, had the Internet existed back then to give these voices a voice, as all leftism and progressivism can keep the reality at bay only if they get to have a totalitarian control of all media to constrain the parameters of debate.

April 7, 2011

Wil Wheaton gets the “special” treatment from the TSA

Filed under: Bureaucracy, Government, Liberty, USA — Tags: , , , — Nicholas @ 08:46

The TSA just got another rave review from a traveller who got the full treatment and didn’t like it:

Yesterday, I was touched — in my opinion, inappropriately — by a TSA agent at LAX.

I’m not going to talk about it in detail until I can speak with an attorney, but I’ve spent much of the last 24 hours replaying it over and over in my mind, and though some of the initial outrage has faded, I still feel sick and angry when I think about it.

What I want to say today is this: I believe that the choice we are currently given by the American government when we need to fly is morally wrong, unconstitutional, and does nothing to enhance passenger safety.

I further believe that when I choose to fly, I should not be forced to choose between submitting myself to a virtually-nude scan (and exposing myself to uncertain health risks due to radiation exposure), or enduring an aggressive, invasive patdown where a stranger puts his hands in my pants, and makes any contact at all with my genitals.

When I left the security screening yesterday, I didn’t feel safe. I felt violated, humiliated, assaulted, and angry. I felt like I never wanted to fly again. I was so furious and upset, my hands shook for quite some time after the ordeal was over. I felt sick to my stomach for hours.

This is wrong. Nobody should have to feel this way, just so we can get on an airplane. We have fundamental human and constitutional rights in America, and among those rights is a reasonable expectation of personal privacy, and freedom from unreasonable searches. I can not believe that the TSA and its supporters believe that what they are doing is reasonable and appropriate. Nobody should have to choose between a virtually-nude body scan or an aggressive, invasive patdown where a stranger puts his or her hands inside your pants and makes any contact at all with your genitals or breasts as a condition of flying.

H/T to occasional commenter “Da Wife” for the link.

April 5, 2011

China’s High Speed Railways: not for the masses

Filed under: China, Government, Technology — Tags: , , , , — Nicholas @ 12:07

Reports of corruption among top officials and soaring costs for China’s HSR network:

. . . question-marks have been raised over these plans after the sacking in February of Liu Zhijun, the minister responsible for building the high-speed network. He was accused of skimming off as much as 1 billion yuan ($152m) in bribes and of keeping as many as 18 mistresses. Zhang Shuguang, another top official in the railways ministry, was later dismissed for corruption. Separately, on March 23rd, state auditors reported that $28m had been embezzled from the 1,300km high-speed line between Beijing and Shanghai, the highest-profile of China’s many rail projects.

Public support for high-speed trains is muted. The trains may reach 350km per hour but fares are proportionately eye-watering. That is all right for well-heeled travellers, happy to have an alternative to flying. But tens of millions of poor migrants who work far afield and flock home for the Chinese new year are being priced out the rail market and have to go by bus (the number of bus journeys is soaring).

The sacking of top officials may be the result merely of one of China’s periodic anti-corruption campaigns. Or it may be the upshot of a high-level factional or personal battle, in which corruption charges are often a favourite weapon. If so, the dismissals would not necessarily affect railway development.

The Wikileaks view of Indian politics

Filed under: Government, India, Media, Politics — Tags: , — Nicholas @ 09:03

Pankaj Mishra talks about the ongoing release of information on India and the political and mercantilist string-pullers who infest every government function:

Food prices become intolerable for the poor. Protests against corruption paralyse the national parliament for weeks on end. Then a series of American diplomatic cables released by WikiLeaks exposes a brazenly mendacious and venal ruling class; the head of government adored by foreign business people and journalists loses his moral authority, turning into a lame duck.

This sounds like Tunisia or Egypt before their uprisings, countries long deprived of representative politics and pillaged by the local agents of neoliberal capitalism. But it is India, where in recent days WikiLeaks has highlighted how national democratic institutions are no defence against the rapacity and selfishness of globalised elites.

Most of the cables — being published by the Hindu, the country’s most respected newspaper in English — offer nothing new to those who haven’t drunk the “Rising India” Kool-Aid vended by business people, politicians and their journalist groupies. The evidence of economic liberalisation providing cover for a wholesale plunder of the country’s resources has been steadily mounting over recent months. The loss in particular of a staggering $39bn in the government’s sale of the telecom spectrum has alerted many Indians to the corrupt nexuses between corporate and political power.

April 4, 2011

“Free speech is a great idea, but we’re in a war”

Filed under: Government, Liberty, Politics, Religion, USA — Tags: , , , — Nicholas @ 09:17

I love the smell of censorship in the morning. It smells like politics:

[Senator Lindsey Graham said] “I wish we could find a way to hold people accountable. Free speech is a great idea, but we’re in a war. During World War II, we had limits on what you could say if it would inspire the enemy. So, burning a Koran is a terrible thing but it doesn’t justify killing someone. Burning a Bible would be a terrible thing but it doesn’t justify murder. Having said that, anytime we can push back here in America against actions like this that put our troops at risk we should do it, and I look forward to working with Senators Kerry, and Reid, and others to condemn this, condemn violence all over the world based on the name of religion. But General Petreaus understand better than anybody else in America what happens when something like this is done in our country and he was right to condemn it and I think Congress would be right to reinforce what General Petreasus said.”

[. . .]

Here’s your answer Senator. No, you don’t need to hold hearings and you don’t need to be looking into ways to limit the free speech rights of American citizens because of the insane reaction of people thousands of miles away who were obviously ginned up by demagogues. War or not, Terry Jones had every right to do what he did.

Jim Geraghty perhaps put it most appropriately:

This pastor, Terry Jones, has a jones for media attention that makes the Kardashians look like J.D. Salinger. He knows that there’s a good chance that tossing the Koran on a pile of charcoal briquettes will make the easily-enraged in far-off lands lash out in that time-tested tradition, killing aid workers, and he doesn’t give a damn. He knows there’s a chance that the Muslim tantrums might put our men and women in uniform at greater risk. He still doesn’t give a damn. He has never given a damn. What, he’s gonna go weak-kneed at the thought of a unanimous Senate resolution?

March 31, 2011

Calculating “Tax Freedom Day” for each state

Filed under: Cancon, Government, USA — Tags: , , , — Nicholas @ 08:25

The least-taxed five states have already celebrated their Tax Freedom Days: Mississippi, Tennessee, South Carolina, Louisiana, and South Dakota. Other states may wait as long as May 2:

Americans will spend an average of 28% of their income to pay federal, state and local taxes this year, the Tax Foundation said Wednesday.

That means you will need to work 102 days — more than three months — just to earn enough to pay your tax bill. So on April 12 you will be free of your 2011 tax burden.

This year’s “Tax Freedom Day,” as the Tax Foundation calls it, comes three days later than last year. Rising incomes — resulting in more income tax owed — are largely to blame for its late arrival, the organization said.

For Canadians, you can calculate your own personal Tax Freedom Day using the Fraser Institute’s customized web tool. If I lived in Alberta, for example, my Tax Freedom day would be May 13, but as I live in Ontario it’s actually May 27.

March 25, 2011

CNN: US government finance requires both spending cuts and tax increases

Filed under: Economics, Government, USA — Tags: , — Nicholas @ 09:26

Jeanne Sahadi at CNN Money insists that the government can’t control the ballooning debt situation by spending cuts alone:

If lawmakers wanted to permanently freeze the debt held by the public at the today’s level — 62% of GDP — they would need to immediately cut spending by 35% or about $1.2 trillion, according to the Government Accountability Office. And those cuts would need to be permanent from hereon out.

How hard would that be?

Consider that in 2010, all of discretionary spending — including defense — totaled $1.35 trillion. In other words, to do deficit reduction all on the spending side means “you have to cut into the real meat,” said Roberton Williams, senior fellow at the Tax Policy Center.

Consider, too, how much fun lawmakers are having right now trying to negotiate spending cuts for this year alone. Their working range: Between $10 billion and $61 billion.

And here’s the kicker: Even permanently cutting $1.2 trillion today wouldn’t be the end of the story. Deficit hawks note that public debt at 60% is still well above the country’s historical average — which is below 40%. So more cutting would need to occur in subsequent decades.

The joker in the pack is that interest rates at the moment are incredibly low by historical standards. This is an aberration, not the “new normal”, and won’t last. If the government fails to take serious steps to reduce the debt now, it’s vanishingly unlikely that they’ll be able to avoid a default. It’s like running up a huge debt on a credit card with a low introductory interest rate: once the low interest period is over, the debt becomes payable at the higher interest rate. Pretending that tomorrow will never come is never a good planning strategy.

March 24, 2011

Even if the government falls, we’ll still be paying through the nose

Filed under: Bureaucracy, Cancon, Government — Tags: , — Nicholas @ 10:12

A round-up of what happens if the government falls includes this nugget of information for anyone who hoped the spending would at least slow down while the politicians are off on the campaign trail:

To fund the daily operations of government without a budget, the Governor-General will typically issue special warrants that allow government departments to take funds from the federal bank account (officially known as the Consolidated Revenue Fund) without having to get Parliament’s approval. The money must be “urgently required for the public good” according to the House of Commons Procedure and Practice manual, and the Treasury has to show that no existing funds have been set aside for the payments. The special warrants run from the date that parliament dissolves until 60 days after an election and the government has to give the next Parliament a list of everything they have spent within 15 days of the new government taking office. The money still needs to be retroactively approved by the new Parliament and included in their upcoming budget.

“Ultimately Parliament has to come back an approve the budget but there are these ways of getting interim finance when parliament has not passed a budget,” said Ned Franks, an expert in parliamentary procedure and professor emeritus at Queen’s University.

Thanks to some abuse of the system while Brian Mulroney was prime minister, the system was amended in 1998 to limit the use of special warrants to only those times when Parliament has dissolved.

March 23, 2011

Harper government teeters on the edge

Filed under: Cancon, Government, Politics — Tags: , , , , , — Nicholas @ 12:33

Tasha Kheiriddin thinks this has been a deliberate trap laid by the Tories and that the opposition have tumbled right into it:

The Foyer of the House of Commons turned into a beehive on speed. Within the next hour came reports that the NDP and Liberals were moving staff into their war room. Mr. Layton, gaunt but with a glint of steel in his eyes, strode stiffly by the CBC booth, leaning on his cane, turned to a group of journalists and smiled: “Looks like an election”. Liberal leader Michael Ignatieff tweeted the first slogan of the coming campaign “An out-of-touch budget from an out-of control government.”

But Mr. Ignatieff is dead wrong — on both counts. This is very much an in-control government, which played its cards brilliantly in the face of not one, but two confidence motions this week. By falling on the budget instead of the contempt of Parliament motion, the Tories escape the stigma of being the only government to ever have been found in contempt by the House. This gives the Opposition less mud to throw their way, which is helpful in light of the brewing Carson scandal, and puts the focus back on the economy, the Tories’ campaign issue of choice.

It is also a very in-touch budget — in all the ways that benefit the Conservatives. The Tories have reached out and touched most of their key voter groups: homeowners, families, seniors, the military, and rural Canadians. They ignored less promising sectors of the electorates, including Quebec, though it is likely they are saving a Quebec HST announcement for the campaign. Had they included it in the budget itself, the Bloc would have been force to support it, which would have meant no election — yet another sign that the Tories were more interested in going to the polls than getting a deal.

Lots of pundits have (correctly) called the budget a “boutique”: small but attractive lures for many of the key constituencies, so that the Tories will have lots of opportunities on the campaign trail to characterize the Liberals as “taking away” promised benefits. It may never have been intended to be implemented: it works far too well as a campaign paper.

To the despair of small-c conservatives, the budget does not address the things that matter to that market. As Kelly McParland points out, it’s really a Liberal budget in a blue wrapper:

[The Toronto Star] is a big [Liberal party] supporter. It would like nothing more than to help orchestrate a return of Liberal hegemony to Ottawa. Yet it’s having trouble finding bad things to say about the budget over which the Liberal leader is determined to force an election.

Here are Wednesday’s headlines from The Star:
Page 1: “2011 Federal Budget Highlights: A Sprinkling of Cash for Almost Everyone”
Page 6: “Budget Promises $300 Tax Credit for Family Caregiver”
Page 8: “Tories Blueprint Looks a Shade of Liberal Red”
Page 9: “Low-income Elderly to Get Supplement Boost”
Page 9: “Tories Revive Retrofit Funding”
Page 9: “Job Creation Still Key Priority in Federal Budget”

Yes, the Star managed to editorialize against the budget, arguing it “fails [the] nation’s needs,” but Finance Minister Jim Flaherty could happily stand at the Toronto GO station handing this newspaper to commuters and seeking their support.

US government financial plight: more reasons to worry

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 12:21

The ever cheerful Monty brings us another helping of financial DOOM:

Our whole “plan” (to the extent that our government even has a plan for getting us out of this mess) is founded on the belief that our borrowing costs will remain low — that the interest-rate environment will remain at or near zero indefinitely. Well, it won’t, and I don’t think enough people are thinking about what a huge dent interest-payments on the debt is going to put into our budget. Our entire federal budget will be eaten up with four things: Medicare, Medicaid, Social Security, and debt-service payments. That means any additional spending (like, oh, say, the military) will have to come from borrowed money…which will have to be borrowed at higher rates, which in turn causes debt-service costs to rise yet again. This is the vicious debt-spiral many European countries now find themselves in.

What has basically happened during the past forty or fifty years is that we’ve spent most of our actual capital — mainly on our vast welfare state and government apparatus, but also on our huge military. We are like a couple who lives paycheck-to-paycheck: any money that comes in goes right back out. Nothing gets tucked away. An unexpected expense — a busted water-heater, broken-down car, or an unexpected illness or injury — all of a sudden puts you in a hell of a financial hurt. So you borrow. You can’t really afford even the payment much less the whole loan, but what can you do? You may even cast caution to the winds and buy that jet-ski you’ve had your eye on (on credit, of course). Why not? You’re already screwed; being screwed a little bit more hardly matters at this point, right? Then something else breaks and you have to borrow again (if you can), and the monthly bills start to pinch you where you live — it’s either service your debt or pay the rent, because you can’t do both. At that point, the spinning plates will come crashing down — you will either default on your debt to avoid starving your family into oblivion, or you will force your family to live like animals in a cave so you can pay off the debt you ran up.

So the frustrated call goes up: “Okay, we’re boned! I get it! But what can we do about it?” Answer: I don’t know. Maybe nothing, at this point.

[. . .]

I’ve often said that circumstances will impose a solution on us if we don’t find one ourselves — we simply cannot continue as we are. And the reckoning is not comfortably far off in the future; it’s unfolding right now, before our very eyes.

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