Quotulatiousness

March 8, 2010

This sounds familiar

Filed under: Bureaucracy, Cancon, Economics, Europe, Government, Greece — Tags: , , — Nicholas @ 17:39

The other day, I wrote:

Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.

During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice.

Clearly I’m not the only one thinking this way, as Kelly McParland makes a similar pitch:

I like they way they put “bail out” in quotations, as if devoting billions of dollars to the rescue of Greece isn’t really a bail-out. Because in union-land, it isn’t. By definition, everything a unionized worker earns is deserved, because someone, somewhere agreed to pay it — especially workers employed by the government, who make up the bulk of the protesting Greeks. And since they earned it, there’s no reason they should make any sacrifices to help the country avoid economic disaster. No, that’s for little people, who don’t have government jobs.

Canada isn’t Greece, but it’s no healthier here to have a country divided into two classes. Class One: Public sector workers with safe, secure, well-paid jobs it is almost impossible for them to lose, with generous holidays, guaranteed pensions and protection against the economic cycles that prevail in the private sector. Class Two: Everyone else.

It used to be that the people in Class Two had an incentive for risking exposure to economic ups and downs. The pay was generally better, and it was possible to spend an entire career with a successful company and enjoy a pension at the end. Not any more. If events of the past few years have proved anything, it’s that no company is too big to fail, and there’s no guarantee benefits promised when you were hired are likely to be there when you leave. If the pension goes splat, like so many have, you’re on your own.

While the incentive to face the risks of the private sector have diminished, life on the government payroll has never been better. After all those nasty cutbacks imposed by Finance Minister Paul Martin, the Conservatives were elected in 2006, and have been spending wildly ever since. All the staff reductions have been reversed and the public payroll is bigger than ever. Salaries have largely caught up with private sector levels, and the pensions are just as rock solid as they’ve ever been. And you can’t be fired, short of indictment for murder.

At some point (and that point may be sooner than anyone believes), growth in civil service has to stop: there won’t be enough non-civil service jobs to pay for all the rest. Especially as government jobs become more and more attractive over their private sector counterparts. Why not take a job paying more money, with longer vacations, guaranteed pensions, and no risk of losing the job? You’d be crazy to take a job anywhere else, wouldn’t you?

March 5, 2010

Government wages and benefits outpace private sector

Filed under: Bureaucracy, Economics, Government, USA — Tags: , — Nicholas @ 12:59

Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.

During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice. Katherine Mangu-Ward has the gory details:

There are two million civilian federal workers. 1.1 million of them have direct private sector equivalents. And they are laughing their asses off at those private sector suckers, who are doing similar jobs for less pay — often a lot less.

“Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector,” according to a USA Today report. In jobs where there are private equivalents, the feds are earning $7,645 more on average than their private counterparts.

[. . .]

Note that the figures above are salaries and don’t include the value of benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker.

New economic term: the Jukebox economy

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 08:33

Terence Corcoran endorses a neologism from Bob Hoye, which seems to perfectly capture the current notions about the role of government in the economy:

In the economic culture of our time, in which government is seen as the engine of growth and prosperity, maybe it is too much to expect anything more. We live in what veteran Vancouver investment advisor Bob Hoye has called a jukebox economy. “Jukebox economics,” he wrote recently, “is a suitable description of the notion that the economy can only be kept going if the government feeds it quarters.”

So long as jukebox economics is the dominant economic ideology in Canada and elsewhere, the orthodoxy that guides our politicians and the conventional wisdom our media feeds off, we will continue to get budgets like the one Mr. Flaherty delivered on Thursday. In his speech he kept pumping quarters into the machine, calling the spending “investments” and describing the outcome as “jobs.”

Quarters in, jobs out. “We are in the middle of the largest federal investment in infrastructure in over 60 years. We are putting Canadians to work.” Are these good investments producing worthy jobs? Will they boost productivity and real economic gains that will actually generate what Canada desperately needs, which is greater wealth and progress that actually increases the standard of living for Canadians?

Nobody’s really counting. The word “productivity” didn’t cross Mr. Flaherty’s lips, even though it is universally acknowledged as Canada’s single greatest weakness. Even in the best of times, Canada falls behind. In the 424-page official Budget 2010 document assembled by scores of economic experts, the productivity problem is studiously avoided. The case is never made that the massive multi-year spending plans could really generate productivity gains, most likely because Finance Canada officials know they don’t exist. Of about 15 mentions of productivity gains, most are associated with a few tax cuts and the tariff reduction on manufacturing equipment imports — one of the few worthy measures in the budget.

It’s become a common notion that the government has a tap, marked “jobs” which they can easily turn on and off. This is why so many journalists demand that the government “create” jobs — they think that not only is it the government’s role, but that it’s a unique one. Individuals and firms don’t create jobs, in this mental model, unless the government prods them into doing so.

It’s another example of cargo cult thinking . . . that by some form of sympathetic magic, the government can induce the sky gods to produce the required manna on demand.

March 4, 2010

QotD: The problem with modern journalism

Filed under: Government, Media, Politics, Quotations — Tags: , , , , , , — Nicholas @ 16:44

The Times seems to have forgotten the most important aspect of the news business. For years now ’skeptic’ has been a dirty word at the Times when the subject of climate change comes up. Excuse me, but reporters are supposed to be skeptics. They are supposed to be cynical, hard bitten people who trust their mothers — but cut the cards. They are supposed to think that scientists are probably too much in love with their data, that issue advocates have hidden agendas, that high-toned rhetoric is often a cover for naked self interest, that bloviating politicians have cynical motives and that heroes, even Nobel Prize laureates, have feet of clay. That is their job; it is why we respect them and why we pay attention to what they write.

Reporters are not supposed to be wide-eyed gee-whiz college kids believing everything they hear and using the news columns of the paper to promote a social agenda. They are wet blankets, not cheerleaders, Eeyores, not Piglets and they can safely leave all the advocacy and flag-waving to the editorial writers and the op-ed pages.

This is not just a question of liberal bias. The same wide-eyed gee-whiz culture shaped much of the reporting on the run-up to the Iraq War. Maybe the word we are looking for when trying to describe what’s wrong with the mainstream press isn’t ‘liberal’ — maybe the term is something like ‘credulous’ or ‘naive.’ The gradual substitution of ‘professional journalists’ for the old hard boiled hacks may have given us a generation of journalists who are used to trusting reputable authority. They honestly think that people with good credentials and good manners don’t lie.

Today’s journalists are much too well-bred and well-connected to stand there in the crowd shouting “The emperor has no clothes!” They’ve worked with the tailors, they have had long background interviews with the tailors, they’ve been present for some of the fittings. Of course the emperor’s new clothes are fantastic; only those rude and uncouth ‘clothing deniers’ still have any doubts.

Walter Russell Mead, “Treason is a matter of dates”, The American Interest Online, 2010-03-03

Shooting the messenger over extra taxes

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 07:32

An article in the Chicago Tribune talks about the latest “extra” to appear on restaurant bills in San Francisco: the “health” charge. This is how many restaurants in the city are handling the latest tax increase — making it explicit on the bill — but the Tribune writer appears to feel the restaurant owners should “eat” the new tax as “part of doing business”. Implied in this is that the restaurants shouldn’t raise prices either.

So, let’s all blame those evil restaurant owners, shall we?

The rationale for this one is to cover the employers’ mandatory contribution to the City’s “Healthy San Francisco” health-coverage system. The charge actually is levied on employers, but at least some restaurants are adding a few dollars or percentage points to each customer’s bill to cover this charge.

The restaurants’ excuse for assessing this charge separately is to let customers know how much they’re paying for employees’ health coverage. That’s the same excuse hotels use when they add “resort” or “housekeeping” fees to unsuspecting guests’ room bills. It’s the same excuse airlines would use to exclude fuel surcharges from their advertised fares if the Department of Transportation would allow them. And it’s sheer nonsense. Employees’ health insurance is no less of a cost of doing business than rent, property taxes, food costs, security services and all the other inputs businesses require to operate. To single out health care for a separate surcharge is unwarranted.

What’s missing here is the distinction between mandatory fees or taxes which various levels of government impose, and extra charges for things which logically should be intrinsic to the basic price. I agree that adding a “housekeeping” item to a hotel bill is wrong, but calling out a new tax that has to be paid is correct. Hidden taxes (in which category the Tribune writer misleadingly includes the San Francisco “health” charge) are the ones that don’t get itemized for you on your bill . . . that’s the “hidden” part.

Hidden taxes are far worse than itemized entries, because when prices rise due to changes in the tax rate, they naturally blame the seller (who doesn’t benefit from the raised price) and not the government which raised the tax rate underlying the price increase.

March 2, 2010

Linking Olympic glory with jackbooted thugs?

Filed under: Cancon, Government, Sports — Tags: , , , — Nicholas @ 17:14

Frequent commenter “Lickmuffin” responded to the post entitled SWAT forces now spend more time doing non-SWAT policing with a long comment tying together the Olympics and the omnipresent SWAT teams:

I have to say that I really don’t understand your views here.
Olympic fascist spectacle: A-OK!
The actual functional trappings of a police state: Boo, hiss!
You can’t have one without the other. As the man said, you have to break a few skulls to make Olympic Gold. Or something like that.

Lickmuffin then provided an extended discussion on the same theme:

It’s quite simple, really: if you want to host the Olympics, and you want to have a succesful national Olympic team, you have to have armed-to-the teeth SWAT teams.

To fund the Olympics and Olympians, you need to have confiscatory tax rates.

When you have confiscatory tax rates, you’re going to have people trying to avoid the taxes.

Some of those people are going to engage in dodgy and risky behaviour, such as importing, growing, manufacturing or just generally dealing with narcotics.

Some of those people are going to use violence to protect their businesses.

To deal with those guys, you need heavily armed and specially trained police.

Just three degrees of separation there, really, but it works out to something like this:

Publicly funded Olympics = SWAT teams on every corner.

What do we tell people whose family members are killed in no-knock raids where the cops had the wrong address? “Sorry about that, but that snowboarding dude needed a gold medal.”

It’s ironic that the first snowboarder to win a medal for the sport — a Canadian — tested positive for weed.

It’s not ironic at all that the same dude wants to become a Liberal MP. Snowboard boots, jackboots — same thing, really.

It really does cover all the ground, doesn’t it? Just lacking the obligatory German rendering of SWAT as Sturmabteilung, and we’re golden, as they say.

March 1, 2010

Christopher Hitchens’ retrospective on the life of Alexander Haig

Filed under: Government, History, Politics, USA — Tags: , , , — Nicholas @ 09:30

Christopher Hitchens does not come to praise (a would-be) Caesar, but to bury him . . . good and deep:

“Nobody has a higher opinion of General Alexander Haig than I do,” I once wrote. “And I think he is a homicidal buffoon.” I did not then realize that this view of mine was at least partly shared by so many senior figures on the American right.

When I moved to Washington in the very early years of Ronald Reagan’s tenure, I was pretty sure that Haig, then secretary of state, was delusional (and not even in a good way). What I would not have believed then was what has become apparent since — that his boss, Ronald Reagan, often felt the same way.

And this is the nice part of the biography. Go read the whole thing.

February 26, 2010

Detroit has no problem that the government can’t make worse

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , , , — Nicholas @ 12:11

Detroit has had a rough time lately — if you define “lately” as 50 years. But never fear . . . in spite of depopulation, de-industrialization, urban decay, crime, and soaring rates of illiteracy, the government is going to do something:

From its status as one of the wealthiest communities in the country, with a population of close to 2 million people 50 years ago, it has shrunk to a chaotic, sclerotic mess of 900,000 souls.

So in America, land of the free, the city elders of Detroit are now planning a forced march down Woodward Avenue. Citizens will be relocated from desolate neighbourhoods, their former homes bulldozed.

How will the city get people to move? In some cases, it will invoke eminent domain legislation, that favourite weapon of central planners, and expropriate. In others, it will simply cut off more services as they become too expensive to provide.

Mass state-driven relocation has happened in Communist China, the former Soviet Union, but America? Not since the creation of Native American reservations, and certainly not in 21st century urban areas.

February 25, 2010

“Ontario will have the highest electricity rates in North America”

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 12:32

Parker Gallant is quite disturbed by the most recent annual report from Hydro One, Ontario’s government-owned electrical transmission corporation:

No major media reported on Hydro One’s annual statement to “investors,” as the company puts it, even though the report is a dog’s breakfast of warning signs and bizarre trends that spell trouble.

[. . .]

As debt rises, Hydro One’s debt-to-equity ratio weakened from 1.71:1 to 1.91:1. It borrows money to pay for capital costs surrounding the province’s Green Energy Act and puts the company at risk of a debt ratings downgrade, which will drive borrowing costs up.

Return on equity is down to 8.7% from 9.7% in 2008, indicating an overall decline in the value of the company. Return on assets fell to 3% from 3.5%. As a result, the dividend payment to the province was $188-million, down 27.4%. But the CEO says the company is “on target.”

Even though revenues and costs are rising, and profit falling, Hydro One handles less electricity — 139.2 terawatts, a decline of 6.4%. The cost of distribution per terawatt was up by 14.9%. Operations and maintenance costs keep rising as power transmitted declines. The number of employees rose 7.7%. Since 2002, when the company had 3,933 employees to distribute 153.2 terawatts, total employment has jumped 38% to 4,400 to distribute 9% less power. Are these additional 1500 staff working in the field or at head office working on rate increase applications?

February 20, 2010

QotD: He talked his way in . . . is he now talking his way out again?

Filed under: Government, Politics, Quotations, USA — Tags: , — Nicholas @ 13:51

Barack Obama has done everything possible to destroy the glowing reputation he brought to the White House after his triumphs in the Democratic primaries and the general election of 2008. The most striking fact about the cloud of failure now surrounding him is that it’s entirely self-generated.

No credible Republican has been harassing him, leaping on his every mistake. Journalists of the liberal persuasion remain admirers. His most vocal detractors are loudmouthed commentators, unlikely to influence the independent voters who made Obama President. He has no one to blame.

[. . .]

He didn’t become President for his accomplishments; he did it mainly on oratory. But in office his tone has changed. He doesn’t seem to care whether he makes an impact or not and rarely suggests that something crucial is at stake. You can listen to him for 20 minutes and realize an hour later that you can’t remember anything he said.

He performs a sort of dance with the cameras, turning first to the right, then to the left, then back again. It seemed spontaneous for a while but it’s now pure ritual. He’s developed a manner that’s so cool it can’t be distinguished from indifference.

He demonstrates the titanic gulf between an election, however daunting, and the biggest job in the world. Given all the hurdles in the path of blacks, his original decision to run was a brave and breathtaking leap of the imagination. His campaign was brilliant. But serving as President requires even more audacity. Perhaps his many stumbles, and his misguided attempt to do all the serious work of the presidency more or less on his own, indicate that he hasn’t yet learned to see himself in the role of leader. Perhaps he’s become the star of a drama for which he has no script.

Robert Fulford, “Why is Obama failing?”, National Post, 2010-02-20

February 11, 2010

Nobody knows how many died in the Haiti earthquake

Filed under: Americas, Government, Media — Tags: , , — Nicholas @ 08:22

I can only assume it’s a slow news day for this to be a headline: “Differing death tolls raise suspicions that no one really knows how many died in Haiti quake“. Of course nobody knows: the Haitian government was barely functioning even before the quake hit, and not at all afterwards. They had no accurate idea of how many people lived in the area beforehand, and they still haven’t been able to recover all the bodies. Any death toll estimates will be inaccurate, almost by definition:

Wildly conflicting death tolls from Haitian officials have raised suspicions that no one really knows how many people died in the Jan. 12 earthquake.

The only thing that seems certain is the death toll is one of the highest in a modern disaster.

A day after Communications Minister Marie-Laurence Jocelyn Lassegue raised the official death toll to 230,000, her office put out a statement Wednesday quoting President Rene Preval as saying 270,000 bodies had been hastily buried by the government following the earthquake.

A press officer withdrew the statement, saying there was an error, but then reissued it within minutes. Later Wednesday, the ministry said there was a typo in the figure — the number should have read 170,000.

Even that didn’t clear things up. In the late afternoon, Preval and Lassegue appeared together at the government’s temporary headquarters.

Preval, speaking English, told journalists there were 170,000 dead, apparently referring to the number of bodies contained in mass graves.

Lassegue interrupted him in French, giving a number lower than she had given the previous day: “No, no, the official number is 210,000.”

Preval dismissed her. “Oh, she doesn’t know what she’s talking about,” he said, again in English.

What is not in dispute is that the death toll was very high, and that even with all the disaster relief efforts from other countries, there will still be many more deaths in the quake’s aftermath. Food, water, and medical aid is still not reaching everyone. That fact reduces the importance of the squabble over macabre numbers to a little bit of political theatre.

Update, 24 February: Radio Netherlands is claiming that the death toll has been vastly over-estimated and thinks the number of casualties will be under 100,000:

Haiti has buried an estimated 52,000 victims since the earthquake on 12 January 2010. More bodies still lie under the rubble, but the total number of casualties will not surpass 100,000 — that’s according to observation and research on the ground in Haiti, carried out by Radio Netherlands Worldwide.

This number is considerably smaller than the number of 217,000 victims the Haitian government claims to have counted so far, and far fewer than the estimated final count of 300,000 mentioned by President René Préval just last Sunday.

February 4, 2010

Unemployment insurance systems can deter hiring

Filed under: Bureaucracy, Government, USA — Tags: , — Nicholas @ 07:31

Jay Goltz discusses how some state-level unemployment insurance systems actually deter firms from hiring new employees:

The unemployment insurance tax may be the most confusing and misunderstood tax there is. It is run by the states, and the rules can vary as much as the weather from one state to another.

Here’s how it works in Illinois. The important point for business owners to know is that when the state pays out claims to a company’s former employees, that company’s unemployment tax rate goes up. For each business, the state calculates how many dollars have been paid in compensation over the previous three years and adds on about 48 percent through various calculations. The result is that in Illinois, you end up paying for incremental compensation claims at a rate of $1.48 for every dollar that a former employee collects.

If you lay off or fire someone without “cause,” that person is eligible for unemployment compensation. “Cause” means that the employee violated a company policy, like coming in late or threatening a co-worker. “Cause” does not include doing a bad job, being very slow, or having a bad attitude.

I’d always assumed that the Canadian system (which is run by the federal government) was more generous than the various state-level systems in the US, but there appears to be more variation state-to-state so that may not be true. Certainly the Illinois system’s top payment of $531 per week is well above the Canadian EI top payment ($457 before taxes, according to the servicecanada.gc.ca website). If the Illinois amount is after tax, that’s significantly more than a Canadian claimant would get.

February 3, 2010

Canada’s economy judged (marginally) more free than the US

Filed under: Cancon, Economics, Government, Liberty, USA — Tags: , , , — Nicholas @ 09:30

H/T to Power Line blog for the image.

January 29, 2010

High taxes/low taxes, it’s all relative

Filed under: Cancon, Economics, Government, History — Tags: , — Nicholas @ 09:27

Lorne Gunter finds that what were once considered “intolerable” rates of taxation are microscopic compared to what we pay today:

The American colonists, by comparison, felt they were groaning under a crippling tax burden. Many of their staples, they felt, were onerously taxed while they received little from England in return and had no say in how large the levies against them would be.

[. . .]

So out of curiosity, I asked the historian what the level of taxation was in 1776 that caused the U.S. to declare its independence.

I will always recall his answer: “the equivalent today of about 5% to 7% of their income.”

What?

Today, in Canada, all levels of government, through all their taxes, can confiscate as much as half or more of a taxpayer’s income, in total. Income taxes, pension claw-backs, the GST, gasoline excise taxes, import duties and tariffs, estate taxes, property taxes, capital gains and on and on and on.

And yet, like the abused spouse rushing back to an abuser, many Canadians continue to sing the praises of ever bigger and bigger government. They rush to it in any crisis looking to be saved, whether through “free” health care during times of personal crisis or through auto company bailouts that demonstrate solidarity with distant workers in distant communities during times of global crisis.

The problem has been that Canadians expect the government (at all levels) to do something any time there’s a real or perceived crisis. Governments are happy to oblige by (at least appearing) to do something. Inevitably, the scope of what the government does increases every year. As “Steve the Pundit” wrote in the comments to the original article:

It’s true that Canadians have become far too dependent on government to save us from any crisis, large or small, much in the same way that the citizens of Metropolis continually looked to “Superman” to save them from all of their ills, whether it be an irradiated mutant bent on mass destruction … or a purse snatcher. Any crisis, it seems, “… look(ed) like a job for Superman!”

Exactly.

Short (political and economic) memories

Filed under: Economics, Government, Politics, USA — Tags: , — Nicholas @ 09:20

David Harsanyi looks at the “lost decade” of the last 10 years and finds not so much of a disaster:

Of the many tall tales spun by President Barack Obama during the State of the Union address this week, there is one, and perhaps only one, that most Americans believe to be true.

The old yarn goes something like this: A long time ago, the United States was an economic powerhouse. We built things with our hands and worked in factories and we loved it.

Our recent prosperity, on the other hand, was built on a house of cards — intellectual innovation, risk, free-wheeling markets and international trade — and nothing more than an illusion.

“We can’t afford another so- called economic expansion like the one from the last decade — what some call the ‘lost decade,’ ” Obama explained. The president went on to promise he would do all he could to stop any pesky so-called expansions in the future. And I believe him.

A recent poll shows that Obama is not alone in his aversion to the 2000s. According to a Pew Research Center poll, over 50 percent of American hold a negative view of the decade. Yet, the 2000s, like decades before it, are by nearly any measure — be it health, standard of living, the environment or technology — a success.

The average unemployment rate during this “lost decade” — including one of those unfortunate man-made disasters to the country’s financial center — was at 5.6 percent. One would think that the president — a man who believes a “jobs” bills that only saw unemployment go from nearly 8 percent to over 10 percent was a wild success — would be sort of impressed.

It may be a factor in any given decade, but it’s surprising how deep the short-term memories seem to be coloured by the recession at the end of the decade (the one we’re still struggling out of).

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