Quotulatiousness

June 8, 2010

Questions of basic economics

Filed under: Economics, Education, Government, Politics, USA — Tags: , — Nicholas @ 17:25

Daniel Klein surveyed nearly 5,000 voting-age Americans on their basic comprehension of the political trade-offs on economic issues. He also asked them to identify themselves on the political spectrum. There were some interesting correlations:

Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.

Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.

Therefore, we counted as incorrect responses of “somewhat disagree” and “strongly disagree.” This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer “not sure,” which we do not count as incorrect.

In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.

[. . .]

The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

H/T to Ghost of a Flea.

Are we ready for “a serious debate about returning to the gold standard”?

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 13:02

The more I read of Maxime Bernier’s thoughts, the more I wonder how long it’ll be before he’s drummed out of Stephen Harper’s party: he’s far too sensible. Here, for example, he outlines what it is that central banks do to your money, and why it’s a bad deal for ordinary Canadians:

All this guessing about setting rates has nothing to do with capitalism and free markets; it has more to do with central planning and government control of the money supply. In a monetary free market, the interest rate would be determined by the demand for credit and the supply of savings, just like any other price in the economy.

Government control over money has serious consequences that few people seem to be aware of.

One of them is that central banks are continually increasing the quantity of money that is circulating in the economy. In Canada for example, if we use the strictest definition of money supply, it has increased by 6 to 14% annually during the past dozen years. The situation is about the same everywhere.

The effects of constantly creating new money out of thin air have been a debasement of our money and a dramatic increase in prices. The reason why overall prices go up is not because businesses are greedy, or because wages go up, or because the price of oil goes up. Ultimately, only the central bank is responsible for creating the conditions for prices to rise by printing more and more money.

With all this, it’s surprising that he has (so far) managed to stay in the Conservative party, which doesn’t appear to actually believe in anything much anymore . . . other than the need to stay in power.

Update, 9 June: His speech (from which the article linked above was drawn) gets positive reviews.

June 5, 2010

Happy Tax Freedom Day! Maybe that’s not the right word . . .

Filed under: Cancon, Government, Liberty, Politics — Tags: — Nicholas @ 00:07

June 3, 2010

US & Canadian funding for War of 1812 bicentennial events

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

Colby Cosh floats the notion that one of the reasons for the huge disparity in funding for 1812 bicentennial events between the Canadian and American governments is “Maybe they’re still mad they lost”.

In the eyes of the world, the War of 1812 may always appear insignificant against its Napoleonic backdrop. But it did decide the destiny of a continent, persuading Empire and Union that it was better to have trade crossing the border than troops.

Prime Minister Stephen Harper was in Niagara Falls, Ont., on May 21, opening a new federally funded expansion to the city’s History Museum, which stands on the site of the ferocious July 1814 Battle of Lundy’s Lane. The federal and provincial governments are each giving the museum up to $3.2 million; for the feds, the money is part of a Throne Speech promise to commemorate the bicentennial of the war, “an event that was key to shaping our identity as Canadians and ultimately our existence as a country.”

Another $9 million in 50-50 federal-provincial cash is going to three Niagara Parks Commission sites: Old Fort Erie, McFarland House, and the Laura Secord Homestead. Ottawa has also set aside $12 million for improvements to 1812-related National Historic Sites along the frontier, including Gen. Brock’s monument at Queenston Heights. And Toronto is putting at least $5 million into a new visitors’ centre at Fort York.

But the only corresponding public funding on the other side of the border, as noted by the Buffalo News in April, has been a measly US$5,000 donation from the Niagara County legislature. Why isn’t Uncle Sam pulling his weight?

It’s more likely that the various levels of government are afraid of being seen to spend money on frivolous activities.

June 1, 2010

QotD: The Pascal’s Wager of Economics

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

[S]timulus spending is the Pascal’s Wager of economics. Seventeenth century philosopher Blaise Pascal couldn’t prove God existed, but figured he might as well be devout since, if there is a God, he’s saved from damnation. If there wasn’t, well, no harm in trying. Politicians see stimulus spending the same way. They can’t prove it works, but if they sit on their hands during a downturn, they know they’ll be blamed for inaction should things turn worse. If and when the economy recovers, as it has here, the government’s happy to take credit. And if more misery comes? They can at least claim to have staved off larger calamity — which is how it’s gone in the U.S., where they’re now spending their third stimulus package in two years.

Politicians are only acting rationally. Last year, they were convinced they faced another Great Depression. [. . .]

Get used to this. Since the narrative that stimulus spending pulled us back from the abyss works for Ottawa, it virtually guarantees that, when dark economic clouds are again sighted from Parliament Hill, we’ll see this routine recur: Dire recession warnings from politicians, followed by stimulus as insurance to cover political hides from any economic blame. As long as future taxpayers get the bill, via future debt payments, it’s as risk-free a gambit as Pascal’s: The latest stimulus added tens of billions in national red ink with little political distress for the Tories.

Kevin Libin, “The Stimulus Bluff: There’s Mounting Evidence That Government Spending Has Had No Impact On The Economic Recovery. Too Bad Politicians Aren’t Listening”, National Post, 2010-06-01

May 31, 2010

QotD: A lesson for today

Filed under: Bureaucracy, Economics, Government, Liberty, Quotations — Tags: , — Nicholas @ 09:03

Empires, indeed governments generally, tend to be good things at first and bad things the longer they last. First they improve society’s ability to flourish by providing central services and removing impediments to trade and specialisation; thus, even Genghis Khan’s Pax Mongolica lubricated Asia’s overland trade by exterminating brigands along the Silk Road, thus lowering the cost of oriental goods in European parlours. But then, as Peter Turchin argues following the lead of the medieval geographer Ibn Khaldun, governments gradually employ more and more ambitious elites who capture a greater and greater share of the society’s income by interfering more and more in people’s lives as they give themselves more and more rules to enforce, until they kill the goose that lays the golden eggs. There is a lesson for today. Economists are quick to speak of “market failure”, and rightly so, but a greater threat comes from “government failure”. Because it is a monopoly, government brings inefficiency and stagnation to most things it runs; government agencies pursue the inflation of their budgets rather than the service of the customers; pressure groups form an unholy alliance with agencies to extract more money from taxpayers for their members. Yet despite all this, most clever people still call for government to run more things and assume that if it did so, it would somehow be more perfect, more selfless, next time.

Matt Ridley, The Rational Optimist: How Prosperity Evolves, p. 182

May 28, 2010

Is it too late to cancel?

Filed under: Bureaucracy, Cancon, Economics, Government, Politics — Tags: , , , , , , , , — Nicholas @ 14:33

Chris Selley rounds up the (almost unanimous) pundits’ opinions about the billion-dollar-boondoggle-summit-set:

Is it too late to cancel the G8 and G20 summits?

The National Post‘s Don Martin for the win: “No amount of righteous government bluster about living in post-9/11 protection paranoia, last week’s bank firebombing in Ottawa or the precedent of hosting two back-to-back summits can explain how an $18-million security tab for the G20 in Pittsburgh last September, which involved 4,000 police, must balloon to a billion dollars in Toronto requiring 10,000 cops on the ground.” Yup. It’s outrageous, and the government seems very oddly . . . proud of it. We can hardly wait for the Auditor-General and Parliamentary Budget Officer to find out just where this money went. Especially in a climate where Canadians are thoroughly cheesed off about government spending in the first place, it’s not too much of a stretch to say this is the sort of issue that might bring down a government.

“A case of bureaucracy gone wild,” is Jeffrey Simpson‘s uncontroversial verdict in The Globe and Mail, “or planning gone crazy, of fear sinking itself into every official’s and security person’s heart.” Imagine what we could have bought with that $1-billion! A bunch more Canada Research Chairs, or a whack of “clean-energy projects,” or assistance for “cultural groups” — so sleepy — or, hey, now we’re talking, a massive injection of cash for infrastructure on aboriginal reserves. Or, as Simpson says, “whatever.” Almost literally anything would be better. We’d arguably be better off flushing the $1-billion down the john.

For those of you looking forward to suffering through the event, here’s the official map of the restricted area around the Metro Convention Centre:

The best advice — unless you’re hoping for a run-in with the police — is to avoid Toronto for that weekend (plus a few days in either direction).

May 20, 2010

The root of the Greek economic crisis

Filed under: Economics, Europe, Government, Greece — Tags: , , , — Nicholas @ 12:07

No, it’s not the evil banks, the evil insurance companies, the evil oil companies, or even the evil manufacturing sector (take it as read that most media types think every corporation is, by definition, evil). No, in this case the reports are starting to identify the real culprit: the civil service. Mark Steyn summarizes handily:

They were not an “anti-government” mob, but a government mob, a mob comprised largely of civil servants. That they are highly uncivil and disinclined to serve should come as no surprise: they’re paid more and they retire earlier, and that’s how they want to keep it. So they’re objecting to austerity measures that would end, for example, the tradition of 14 monthly paycheques per annum. You read that right: the Greek public sector cannot be bound by anything so humdrum as temporal reality. So, when it was mooted that the “workers” might henceforth receive a mere 12 monthly paycheques per annum, they rioted. Their hapless victims — a man and two women — were a trio of clerks trapped in a bank when the mob set it alight and then obstructed emergency crews attempting to rescue them.

Unlovely as they are, the Greek rioters are the logical end point of the advanced social democratic state: not an oppressed underclass, but a pampered overclass, rioting in defence of its privileges and insisting on more subsidy, more benefits, more featherbedding, more government.

We’ve already seen that employees in the public sector have been outpacing their private sector equivalents handsomely, but the Greek civil service has it even better than most:

Greek public sector employees are entitled not only to 14 monthly paycheques per annum during their “working” lives, but also 14 monthly retirement cheques per annum till death.

Nice. I wonder how they got into that interesting arrangement? No matter, the private sector will ride to the rescue, right? Not likely:

According to the World Bank, when it comes to the ease of doing business, Greece ranks 109th out of 183 countries. If they were dramatically to liberate their business-killing economy, they might overtake Lebanon at big hit position 108, and Ethiopia at 107, and maybe Papua New Guinea at 102. And who knows? With even more radical reform, they might crack the Hot One Hundred and be bubbling under such favourable business environments as Yemen (99) and Moldova (94). Greece ranks 140th when it comes to starting a business, and 154th when it comes to protecting investors.

If it’s that difficult to start a new business, is it any wonder that so much of the Greek economy is in the underground/unreported/untaxed sector? Many media reports say that anywhere from 10% to 25% of Greek economic activity is “off the books”. A quick Google search will show a much higher range of estimates going up to 60% . . . and that might be an optimistic under-estimate.

If more than half of the nation’s economic activity is in the black market, it will take much more than adding a few auditors and inspectors to the tax department to fix the problem: an absolute majority of Greeks are actively hiding their business from the government, and any serious attempt to crack down on them will bring down the government. And that’s not even the biggest danger — the Greek government isn’t the most stable entity to start with. The government falling might be a safety valve, because the other alternative is literally revolution.

Talk about your destabilization!

May 14, 2010

QotD: Western civilization – stick a fork in it

Filed under: Government, Law, Liberty, Quotations, USA — Tags: , — Nicholas @ 13:17

In the history of civilization — and that’s how old terrorism is, it wasn’t invented on Sept. 11, 2001 — terrorists have never, on their own, succeeded in destroying or significantly altering a culture. They utterly lack the resources to do so.

Where they have succeeded, terrorists have done so only by so frightening a society into abandoning its fundamental values.

That guy who tried to fly a plane into the White House? The one who failed to detonate an explosive device in an airplane approaching Metro Detroit International? The shoe bomber? The guy who just failed to set off a bomb in Times Square? The homegrown terrorists at Virginia Tech and Fort Hood?

The combined death toll from their acts is less than 100. The U.S., supposedly the world’s sole superpower, has a population of 308 million.

The distinction between a global superpower and a nation afraid of its own shadow is becoming more difficult to discern with every attack on the U.S. homeland. Each has been met with an over-reaction — in the media and among government officials — that would embarrass the Londoners who stoically endured the Blitz.

David Olive, “The terrorists win”, Toronto Star, 2010-05-14

Defence minister denies that the Navy to be cut by half

Filed under: Cancon, Government, Military — Tags: , , — Nicholas @ 09:57

Canada’s Minister of National Defence Peter MacKay claims that the following operational changes to Canada’s naval forces do not constitute a serious cut:

The directive was sent to maritime forces on the west and east coasts, as well as to senior officers in charge of naval reservists.

The letter says:

– The fleet of Kingston-class maritime coastal defence vessels will be reduced to six ships from 12.

– Three frigates, HMCS Montreal, St John’s and Vancouver, will now be conducting domestic and continental missions to a “limited degree.”

– Combat systems on HMCS Toronto and HMCS Ottawa, as well as on HMCS Athabaskan, will be “minimally supported to enable safe to navigate sensors and communications only.”

– A key weapon system on board the Protecteur-class supply ships designed to destroy incoming missiles “will not be supported.”

Jedi Master MacKay is attempting a mind trick: “these are not the defence cuts you’re looking for”.

May 13, 2010

QotD: Because your government cares about your health

Filed under: Cancon, Government, Politics, Quotations — Tags: , , , , — Nicholas @ 12:55

If there ever was a reason to get the Ontario government out of the liquor business, this is it. While taxes on booze will drop on July 1, thanks to the introduction of the province’s new Harmonized Sales Tax, the price of your favourite poison will actually increase because — wait for it — the government doesn’t want to turn you into an alcoholic.

[. . .]

Actually, the whole modus operandi of the LCBO is counter-intuitive. At the same time that it preaches social responsibility, the LCBO inundates Ontario households with glossy brochures that take lifestyle advertising to new heights. The latest one cheekily invites customers to take “French lessons”, and features winsome couples in various states of embrace (hey, aren’t the French always making out?). A concurrent radio campaign features a sexy French-accented female voice extolling the virtues of Bordeaux. You get thirsty just listening to her.

Such campaigns are designed to make Ontarians drink more, not less, of course, funneling more cash into LCBO coffers and keeping its employees on the public payroll at juicy union wages. All fuelled by taxes and a staggering mark-up of 71.5% on that latest imported bottle which pairs so well with flank steak and frites.

This kind of hypocrisy is but one reason why the government shouldn’t be in the liquor business. The others include higher prices, less consumer choice, and the general inefficiency inherent in any monopoly business, whether public or private.

Tasha Kheiriddin, “Lower taxes, higher prices, courtesy of your local LCBO”, National Post, 2010-05-13

May 12, 2010

Welcome to the new British PM: “Dick Clameron”

Filed under: Britain, Government, Liberty, Politics — Tags: , , , , , — Nicholas @ 12:19

The Register‘s guide to the new British government:

The people have spoken — and party leaders Nick Clegg and David Cameron, henceforth to be known as Dick Clameron, have filled in the details.

A document released this afternoon reveals what Lib Dems and Tories have been talking about for the last four days, and what our new coalition overlords have in store for us over the next four years.

As with every political stitch-up, it’s going to be a Curate’s Egg, but there are some positive things being promised:

On civil liberties, there is much to please (most) Reg readers, including

A Freedom or Great Repeal Bill

* The scrapping of the ID card scheme, the National Identity register, the next generation of biometric passports and the Contact Point Database
* Outlawing the finger-printing of children at school without parental permission
* The extension of the scope of the Freedom of Information Act
* Adopting the protections of the Scottish model for the DNA database
* A review of libel laws to protect freedom of speech
* Safeguards against the misuse of anti-terrorism legislation
* Further regulation of CCTV
* An end to storing internet and email records without good reason
* A mechanism to prevent the proliferation of unnecessary new criminal offences

As with any coalition, there’s no guarantee that any of their announced plans will be carried through, but this list of improvements would be a very good thing.

The full text of the agreement between the Conservatives and the Liberal Democrats is at The Times. On reading through the document I’m actually rather pleasantly surprised: more of the sensible policies from each party appears to have slipped into the mix and rather fewer of the authoritarian (Tory) or redistributionist (Lib-Dem) ideas. Yes, it’s only a temporary agreement, but it’s better than I expected.

May 7, 2010

QotD: The HST only looks good on paper

Filed under: Cancon, Economics, Government, Quotations — Tags: , — Nicholas @ 09:47

I know all the reasons why sales taxes — i.e. consumption taxes — are to be preferred to income taxes. Every economist I respect believes consumption taxes are better because they let the taxpayer control the amount of tax he pays. Don’t want to pay as much? Don’t buy as much.

But to an ordinary person, this is a silly argument. Everyone has to buy stuff — school clothes for the kids, a new car, a laptop. If your washing machine breaks down, you have to buy a new one or pay for repairs. There is no alternative but to pay the sales tax.

To consumers, a sales tax looks like the least avoidable kind of tax. For most people, the only true way around a consumption tax is to hid their spending by switching to cash, barter or the black market.

On paper, I agree with my economist buds. And if we lived on paper, I might try to convince you to learn to love the HST.

Lorne Gunter, “The HST is fine on paper. It’s only painful in real life”, National Post, 2010-05-07

May 4, 2010

Let’s return to the proper name: the Royal Canadian Navy

Filed under: Cancon, Government, Military — Tags: , — Nicholas @ 12:05

I can’t help but endorse this Globe & Mail editorial calling for the government to give the Navy back its proper name:

Today marks the 100th anniversary of Canada’s navy, which fought with distinction in two World Wars and the Korean War, and is now, alas, known as the Canadian Forces Maritime Command, a bulky and obscure label that communicates little of what it is and what it has done.

What better way to mark the centennial than to restore its rightful name, the Royal Canadian Navy, which it carried from 1911 to 1968, when defence minister Paul Hellyer unified the navy, army and air force under one command. (At one time, each service reported to its own cabinet minister.) The unification does not need to be undone. The navy does not need to go back to having its own command structure. Just the name will do.

[. . .]

Defence Minister Peter MacKay has honoured the service and sacrifice of the navy by announcing on the weekend that the executive curl, a distinctive loop on the upper stripe of naval officers’ uniforms that disappeared after unification, will make a comeback. He should take the next step and bring the name back.

And while we’re at it, I’m sure the Royal Canadian Air Force would like to go back to its correct name, too.

April 26, 2010

P.J. O’Rourke definitely wasn’t an “A” student

Filed under: Education, Government, Humour, Politics, USA — Tags: , , — Nicholas @ 09:11

At least, based on his apparent contempt for “A” students:

America has made the mistake of letting the A student run things. It was A students who briefly took over the business world during the period of derivatives, credit swaps, and collateralized debt obligations. We’re still reeling from the effects. This is why good businessmen have always adhered to the maxim: “A students work for B students.” Or, as a businessman friend of mine put it, “B students work for C students — A students teach.”

It was a bunch of A students at the Defense Department who planned the syllabus for the Iraq war, and to hell with what happened to the Iraqi Class of ’03 after they’d graduated from Shock and Awe.

The U.S. tax code was written by A students. Every April 15 we have to pay somebody who got an A in accounting to keep ourselves from being sent to jail.

Now there’s health care reform — just the kind of thing that would earn an A on a term paper from that twerp of a grad student who teaches Econ 101.

Why are A students so hateful? I’m sure up at Harvard, over at the New York Times, and inside the White House they think we just envy their smarts. Maybe we are resentful clods gawking with bitter incomprehension at the intellectual magnificence of our betters. If so, why are our betters spending so much time nervously insisting that they’re smarter than Sarah Palin and the Tea Party movement? They are. You can look it up (if you have a fancy education the way our betters do and know what the unabridged Oxford English Dictionary is). “Smart” has its root in the Old English word for being a pain. The adjective has eight other principal definitions ranging from “brisk” to “fashionable” to “neat.” Only two definitions indicate cleverness — smart as in “clever in talk” and smart as in “clever in looking after one’s own interests.” Don’t get smart with me.

Whole piece here.

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