Quotulatiousness

December 7, 2013

Pro and college football as taxpayer-funded non-essential services

Filed under: Football, Government — Tags: , , , , — Nicholas @ 00:01

In Time, Nick Gillespie points out that among the most-subsidized industries in the United States, the college and pro football leagues get a lot from taxpayers (even taxpayers who don’t like football):

As we enter the drama-filled final week of the regular college football season and the final month of the National Football League’s schedule, forget about GM and Chrysler, Solyndra, or even cowboy poetry readings. Fact is, nothing is more profitable, more popular, and more on the public teat than good old American football. That’s right. You, dear taxpayer, are footing the bill for football through an outrageous series of giveaways to billionaire team owners and public universities that put pigskin before sheepskin.

It’s just not right when governments shovel tax dollars at favored companies or special interests, even when those firms are called, say, the Minnesota Vikings or the Scarlet Knights of Rutgers University. The NFL’s Vikings are lousy at scoring touchdowns — they have the worst record in the NFC North — but they’ve proven remarkably adept in shaking down Minnesotans for free money. Next year they’ll be playing ball in a brand-spanking new $975 million complex in downtown Minneapolis, more than half of whose cost is being picked up by state and local taxpayers. Over the 30-year life of the project, the public share of costs will come to $678 million. The team will pay about $13 million a year to use the stadium, but since it gets virtually all revenue from parking, food, luxury boxes, naming rights, and more, it should be able to cover that tab. Not that the Vikings were ever hard up for money: Forbes values the franchise at nearly $800 million and the team’s principal owner, Zygi Wilf, is worth a cool $310 million. When the Minnesota legislature signed off on its stadium deal for the Vikings, the state was facing a $1.1 billion budget deficit. Priorities, priorities.

[…]

Especially in an age of busted government budgets, even the most rabid sports fan should agree that it’s an outrage that the highest-paid public employee in a majority of states is a college football coach (in another 13, it’s a basketball coach). It’s far better to be broke and have a cellar-dwelling NFL franchise, right?

Minor nit: they just broke ground for the Vikings’ new stadium, so it’ll be a few years before they actually open for business there. Other than that, Nick is quite right.

December 3, 2013

Syracuse airport pods – civil liberty violations or crony capitalist profit centres?

Filed under: Government, USA — Tags: , , , — Nicholas @ 09:36

Wendy McElroy thinks that the outrage over the new exit pods at Syracuse Hancock International Airport is misdirected:

There is yet another reason not to fly into or within the US. “Nazi-style detention pods” — that’s what opponents of the Transportation Security Administration (TSA) have called the new “exit pods” being tested at the Syracuse (NY) airport. But the pods are not primarily a rape of civil rights. Their import is equally ominous but more subtle. Their main purpose seems to be profit rather than the flexing of arbitrary power, although the two are closely related.

A major change is occurring in one aspect of airport security. The change? The TSA will no longer be monitoring exit lanes at one-third of American airports; the TSA withdrawal is likely to extend to all airports over time. Exit lanes are the means by which passengers who have completed their travel leave the airport terminal. TSA agents had been policing the lanes to prevent passengers from walking the ‘wrong’ way and re-entering the terminal. Now that task is left to airport security because, as TSA deputy administrator John Halinski explains, ”We firmly believe that exit-lane monitoring is not a screening function, but rather an issue of access control.” Apparently, Halinski believes the ‘S’ in TSA stands for “Screening” because “Security” definitely includes access control.

[…]

The economics of the pod construction make sense only in two contexts. First, the airport wants to avoid or divest itself of unionized employees; unions have been a source of conflict in all areas of airport and airline operations. Second, crony capitalism. This is the faux capitalism by which profits do not result from productivity but from political connections, which often include bribes or kickbacks. The Syracuse Hancock International Airport official “sneak preview” of the security overhaul listed 17 local firms that will profit richly from the construction. Who do the firms know? With what financial incentives did they ‘purchase’ their contracts?

December 2, 2013

Reason.tv: Gregg Easterbrook on how football fleeces taxpayers

Filed under: Books, Business, Football, Media — Tags: , , , — Nicholas @ 16:46

Published on 2 Dec 2013

Whether you like football or not — whether you’ve ever bought a ticket to a high school, college, or NFL game — you’re paying for it.

That’s one of the takeaways from The King of Sports: Football’s Impact on America, Gregg Easterbrook’s fascinating new book on the cultural, economic, and political impact of America’s most popular and lucrative sport.

“The [state-supported] University of Maryland charges each…undergraduate $400 a year to subsidize the football program,” says Easterbrook, who notes that only a half-dozen or so college teams are truly self-supporting. Even powerhouse programs such as the University of Florida’s pull money from students and taxpayers. “They do it,” he says, “because they can get away with it.”

At the pro level, billionaire team owners such as Paul Allen of the Seattle Seahawks and Shahid Khan of the Jacksonville Jaguars benefit from publicly financed stadiums for which they pay little or nothing while reaping all revenue. Easterbrook also talks about how the lobbyists managed to get the NFL chartered as a nonprofit by amending tax codes designed for chambers of commerce and trade organizations.

As ESPN.com‘s Tuesday Morning Quarterback columnist, Easterbrook absolutely loves football but also isn’t slow to throw penalty flags at the game he thinks is uniquely America. In fact, he sees the hypocrisy at the center of the business of football as “one of the ways that football synchs [with] American culture….Everyone in football talks rock-ribbed conservatism, self-reliance. Then their economic structure is subsidies and guaranteed benefits. Isn’t that America?”

Easterbrook sat down with Reason‘s Nick Gillespie to discuss The King of Sports, how the business of football burns taxpayers, and whether increased worries about brain injuries and other problems spell eventual doom for the NFL and other levels of play.

Produced by Todd Krainin. Cameras by Meredith Bragg and Krainin.

November 15, 2013

Corporations and social responsibility

Filed under: Business, Government, Law — Tags: , , , , , — Nicholas @ 14:17

In this week’s Goldberg File email, Jonah Goldberg talks about the notion that corporations should operate with an eye to “social responsibility”:

Milton Friedman was famously opposed to the whole idea of “corporate social responsibility.” His argument was that corporations have a single obligation: to maximize profits for shareholders. When CEOs spend money on gitchy-goo feel-good projects, they are exceeding their authority and wandering outside the lines of their job description. I’ve always been very sympathetic to this view. If you asked me to invest $10,000 dollars in your startup company and then I found out you spent $5,000 of it to sponsor a program to teach prison-gang members to settle their disagreements by acting out scenes from Little Women, I’d be pretty pissed. That’s not why I gave you the money. And it’s pretty shabby of you to buy fame and praise for your generosity while spending someone else’s money. Indeed, it’s not much less selfish than blowing it on a three-day bender with the mayor of Toronto.

There are lots of different takes on this argument and, because this is my “news”letter, I choose not to deal with most of them. My problem with the profit-maximizing-über-alles creed for Big Business is that it offers no principled or moral reason for Big Business to stay out of Uncle Sam’s bed. If the federal government can make it rain Benjamins for any business willing to twerk for its amusement, why should GE or Big Pharma or the insurance companies demur?

Of course, some businessmen understand the risks of getting in bed with the government. But, since there’s lots of money to be made, there will always be other businessmen perfectly happy to put on the French-maid uniform and bark like a dog.

Even Adam Smith said, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” That’s true. What’s even more true is that when government officials and business leaders sit down to talk, the inevitable result is a new “public-private partnership” that uses government force to limit competition from non-whorish corporations. Railroad magnates lobbied for the Interstate Commerce Commission. AT&T asked the government to make them a monopoly in the name of “efficiency” so they could clear the field of competition. Andrew Carnegie wanted government control of the steel industry so he could rely on Uncle Sam to guarantee his profit margins. GE loves Obama’s green-energy stuff, because without the inherent subsidies and regulations, it couldn’t make money off of its green tech.

I have no problem with contractors doing work for the government. It’s better that the guys building roads and bridges work for the private sector. But when big businesses agree to make the country less free, the market less competitive, Americans less prosperous, and the state more powerful just to make a few more bucks for their shareholders, it makes me think that Milton Friedman was wrong. We need a free-market version of corporate social responsibility. We need to equip businessmen with an ethical code that tells them there’s a principled reason not to get in bed with the government. They’d still be free to violate that principle, of course, but if they did, I hope they’d have the good sense not to come running to us to complain that the government has asked them to eat a bowl of dogsh**t.

November 7, 2013

Children and the early industrial revolution

Filed under: Britain, Business, History, Law — Tags: , , , , , — Nicholas @ 11:35

Wendy McElroy talks about the plight of poor children in the early days of the industrial revolution in Britain:

Parish workhouses existed in Britain long before the Industrial Revolution. In 1601, the Poor Relief Act paved the way for parish officials to collect property taxes to provide for the “deserving poor.” In 1723, the Workhouse Test Act was passed to prevent false claims of poverty. Any able-bodied person who wished to receive poor relief was expected to enter a workhouse; its harsh conditions would presumably act as a deterrent. About the same time as the Industrial Revolution (circa 1760-1840), attitudes toward the poor underwent their own revolution. The Napoleonic Wars (1803-1815) not only bled Britain of money; they also created a flood of injured and unemployable men who returned from battle. Those men had families who were plunged into poverty. Between 1795 and 1815 the tab for Britain’s poor relief quadrupled. Meanwhile, the cost of mere subsistence soared because of political machinations such as the Corn Laws, a series of trade laws that artificially preserved the high price of grains produced by British agriculture. Many people could not afford a slice of bread.

But sympathy for the poor was in short supply. Historian Gertrude Himmelfarb’s definitive book The Idea of Poverty chronicles the shift in attitude toward the poor during that period; it turned from compassion to condemnation. An 1832 government report basically divided the poor into two categories: the lazy who sucked up other people’s money and the industrious working poor who were self-supporting. The Poor Law Amendment Act of 1834 instructed parishes to establish “Poor Law Unions” with each union administering a workhouse that continued to act as a deterrent by ‘virtue’ of its miserable conditions. Correctly or not, statesman Benjamin Disraeli called the act an announcement that “poverty is a crime.”

Pauper children were virtually imprisoned in workhouses. And nearly every parish in Britain had a “stockpile” of abandoned workhouse children who were virtually sold to factories. Unlike parents, bureaucrats did not view poor children as loved or otherwise valuable human beings. They were interchangeable units whose presence was a glut on the market because there would always be another poor child born tomorrow. Private businessmen who shook hands with government did not have clean fingers, either. Factory owners could not force free-labor children to take dangerous, wretched jobs but workhouse children had no choice and so they experienced the deepest horrors of child labor. The horror was not because of the free market or capitalism; those forces, along with the family, were among the protectors of children. Child laborers were victims of government, bureaucracy and businessmen who used the law unscrupulously.

October 10, 2013

QotD: Micro-economics with a Chinese twist

Filed under: China, Economics, Quotations — Tags: , — Nicholas @ 08:53

China’s great economic renaissance began when Deng Xiaoping said that creating a modern China required “opening and reform.” Xiaoping hedged on the precise definition of “opening and reform.” In 1989 he sent tanks and infantry to Tiananmen Square to demonstrate that the process had severe limitations.

But micro-economic innovation? Xiaoping sought a micro-economic revolution. Xiaoping wanted Chinese entrepreneurs to fulfill what economist Joseph Schumpeter dubbed the entrepreneur’s function: “to reform or revolutionize the pattern of production.” The micro-economic opportunity, however, came with the Tiananmen restriction: The Party must remain supreme.

China’s first-generation entrepreneurs of micro-economic innovators pulled it off. In 1980 China had a GDP of about $190 billion. In 1998, the year after Xiaoping died, China’s GDP topped $1 trillion. In 2013 China has the world’s second largest economy, with a GDP of over $7 trillion.

Wei Gu is The Wall Street Journal‘s “China Wealth and Luxury editor” — and in 1980 who’d have predicted that job? In a recent article titled “China’s Second-Generation Entrepreneurs A Different Breed,” Gu reported that the “foreign educated” children of Chinese entrepreneurs are not enthralled with “the endless wining and dining of government officials that is necessary to do business in China.” In China, since personal whim still trumps law, businesspeople must constantly curry favor with government officials. It amounts to micro-economic lobbying.

Austin Bay, “China’s Toughest Economic Problem Is Political”, Strategy Page, 2013-10-8

October 9, 2013

Reasons not to be fearful of “China’s economic threat”

Filed under: China, Economics, Government — Tags: , , , , — Nicholas @ 13:50

If you’ve been following the blog for a while, you’ll probably have picked up some of my disdain for the “OMG! China’s going to eat our (economic) lunch!” meme that is pretty much a copy-paste of the same worry over Japan in the 1980s. In Maclean’s, Colby Cosh explains why you shouldn’t put too much effort into worrying about the Chinese economic Colossus crushing us any time real soon:

What I always wonder when I encounter a China bull or a Chinaphobe — for they are two sides of the same coin — is this: Even if they think “socialism with Chinese characteristics” is economically superior to ordinary capitalism, where in China are the parallel cultural institutions to support prolonged capitalist-style growth? Maybe China doesn’t need reciprocal free trade to blow our doors off in the race to utopia. Maybe it doesn’t need untidy democratic quarrelling. One presumes it won’t need a high level of achievement in basic science, either, judging by the Nobels: It is well-documented that the Chinese civilian research establishment is awash in fraud and plagiarism, to say nothing of the destructive favouritism inherent to a one-party state.

Rowan Callick’s new book The Party Forever: Inside China’s Modern Communist Party makes a simple, compact judgment on the general state of Chinese higher education: Just look where the Party leadership sends its own children to university: the U.S. Another important leading indicator of cultural progress is press freedom, which, if history has anything to say on the matter at all, appears to be utterly integral to sustained prosperity. But Mainland China has no newspapers as we understand them; it is not even clear that the regimented, spoon-fed “reporters” there could assemble one, even if the Party would allow it.

The Diane Francises of the world would have us reject the relevance of the Soviet experience to China’s future, to the point of ignoring familiar Soviet themes that are increasingly apparent in China: the vast infrastructure projects standing unused in the middle of nowhere, the blind environmental despoliation, the dodgy economic statistics. Beyond mastery of trading, interior China has simply never possessed much of the cultural technique upon which the advanced stages of economic development would seem to depend. Hong Kong is the exception, but having taken it over, China shows little appetite so far for imitating its social openness and individuality — or for those of Taiwan or Japan or South Korea. It still requires a strange leap of faith to believe it possible for China to economically surpass these neighbours, and ourselves, without becoming a great deal more like us.

Regular visitors to the blog know that I’ve been rather skeptical about the official statistics reported by Chinese government and media sources.

Craft brewers against the big breweries in North Carolina

Filed under: Business, Law, USA — Tags: , , , — Nicholas @ 07:33

The rising tide of craft brewing runs up against the entrenched political interests of the big brewers in Raleigh:

North Carolina politicians in Raleigh like to say they’re pro-jobs and pro-business.

But what happens when lawmakers are forced to pick sides between new, small businesses growing jobs and big legacy businesses trying to hold on to the market share they’ve got? Would it help you to know that the big legacy companies give hundreds of thousands of dollars in campaign contributions and the new small businesses are not yet organized?

There’s just such a battle brewing in North Carolina over beer — and who gets to distribute and market it. It pits a growing number of small craft brewers against big distributors. And the big distributors who are among the largest campaign contributors have state lawmakers on their side.

The number of craft breweries in North Carolina is growing rapidly. The state ranks 10th in the country in the number of craft breweries (70) but drops to 19th in overall beer production. Some small brewers say they could grow faster and generate more local jobs in North Carolina if lawmakers weren’t forcing them to hire outside distributors.

Lawmakers capped the amount of beer brewers can make before they are forced to hire outside distributors to transport and market their product. The law sets the cap at 25,000 barrels per year or 775,000 gallons.

One Charlotte brewer is joining others in pushing back against the cap — saying it’s bad for business and a job killer.

Update: I guess it would help if I included the link to the original article…

September 27, 2013

Harper and climate change … spending

Filed under: Cancon, Environment, Government — Tags: , , , , — Nicholas @ 10:07

David Akin points out that all the major federal parties believe the same thing about climate change, except that the Tories are the ones who’ve been chucking around the money on climate change programs:

The simple fact of Canadian politics here is that, if you do not believe in climate change, there is no federal political party that shares your view. There almost was one in Alberta in its last provincial election but, boy, did that idea get shouted down.

But back to what [former environment minister Peter] Kent said to me in that interview:

“There is no question that since the Industrial Revolution there have been anthropogenic, man-made effects on our global climate. The argument continues in the scientific community how much is evolution and how much is man-made but there is certainly something we can do.”

So what is the something that the Harper government has been doing? Well, truth be told, the Harper Conservatives, like the Martin and Chretien Liberals before them, have not been doing very much. None of them, in fact, got the job done. Which might, come to think of it, be a good reason — if climate change is the only thing you’re voting on — to consider choosing the NDP or the Greens next time around. Not to say they’d actually get it done but it’s pretty clear the other two parties, while they talk a good game, just don’t have the political stomach for the job. Those New Democrats brought us universal health care. Maybe they can fix the environment, too.

Still, that doesn’t mean Conservatives aren’t prepared to spend hundreds of millions of dollars — billions even — on a problem they are accused of not admitting even exists. Take biofuels, for example. Early on, the Harper government got the idea that if corn- or plant-based ethanol displaced enough fossil fuels, we’d easily roll back greenhouse gas emissions. Apparently no one bothered to point out that there is serious doubt that corn-based ethanol is actually a lower-emission alternative to fossil fuels but why complicate things? Ethanol is a good, solid, job-creating green story!

In the long run, the subsidies and outright gifts of government money to green-ish sounding companies will likely be the only reminders of the great global warming panic of the last decade. Certainly little or no actual environmental improvements will be traced to the billions of dollars doled out to cronies under this government.

September 26, 2013

Crony Capitalism and prison privatization

Filed under: Government, Law, USA — Tags: , , , , , — Nicholas @ 09:59

I’m generally in favour of moving economic activities out of the government sphere and into the competitive marketplace, but the privatization of prisons is a great example not of free enterprise but of crony capitalism run amok:

Private prisons are antithetical to a free people. Of all the functions a civilized society should relegate to the public sector, it’s abundantly clear incarceration should be at the very top of the list. Jailing individuals is a public cost that a society takes on in order to ensure there are consequences to breaking certain rules that have been deemed dangerous to the happiness and quality of life within a given population. However, the end goal of any civilized culture must be to try to keep these cost as low possible. This should be achieved by having as few people as possible incarcerated, which is most optimally achieved by reducing incidents of criminality within the population. Given incarceration is an undesirable (albeit necessary) part of any society, the idea is certainly not to incentivize increased incarceration by making it extremely profitable. This is a perverse incentive, and one that is strongly encouraged by the private prison industry to the detriment of society.

[…]

In the Public Interest describes itself as:

    A comprehensive resource center on privatization and responsible contracting. It is committed to equipping citizens, public officials, advocacy groups, and researchers with the information, ideas, and other resources they need to ensure that public contracts with private entities are transparent, fair, well-managed, and effectively monitored, and that those contracts meet the long-term needs of communities.

Their report explains how private prison companies insist that states embed “occupancy guarantees” into their contracts with the public sector. They estimate that at least 65% of all private prison contracts have such guarantees, and in some states, like Arizona, the guarantee is a shockingly high 100%. This leads to overcrowding in many instances, and sometimes violent offenders are placed in prisons set up for nonviolent offenses just to fill the quotas. In the event that the beds can’t be filled, the taxpayer makes up the difference to the private prison company. They win no matter what. It’s just more crony capitalism. Below are some highlights from this excellent report.

Major Findings

  • 65 percent of the private prison contracts ITPI received and analyzed included occupancy guarantees in the form of quotas or required payments for empty prison cells (a “low-crime tax”). These quotas and low-crime taxes put taxpayers on the hook for guaranteeing profits for private prison corporations.
  • Occupancy guarantee clauses in private prison contracts range between 80% and 100%, with 90% as the most frequent occupancy guarantee requirement.
  • Arizona, Louisiana, Oklahoma and Virginia are locked in contracts with the highest occupancy guarantee requirements, with all quotas requiring between 95% and 100% occupancy.

Update: On the topic of prison abuse, there’s an interesting post at Reason talking about the hidden-yet-pervasive practice of locking up children in solitary confinement “for their own protection”:

Solitary confinement was once a punishment reserved for the most-hardened, incorrigible criminals. Today, it is standard practice for tens of thousands of juveniles in prisons and jails across America. Far from being limited to the most violent offenders, solitary confinement is now used against perpetrators of minor crimes and children who are forced to await their trials in total isolation. Often, these stays are prolonged, lasting months or even years at a time.

Widely condemned as cruel and unusual punishment, long-term isolation for juveniles continues because it’s effectively hidden from the public. Research efforts by the American Civil Liberties Union and the Texas Criminal Justice Coalition have struggled to uncover even the most basic facts about how the United States punishes its most vulnerable inmates.

How can a practice be both widespread and hidden? State and federal governments have two effective ways to prevent the public from knowing how deep the problem goes.

The first has to do with the way prisons operate. Sealed off from most public scrutiny, and steeped in an insular culture of unaccountability, prisons are, by their very nature, excellent places to keep secrets. Even more concealed are the solitary-confinement cells, described by inmates as “prisons within prisons.” With loose record-keeping and different standards used by different states, it’s almost impossible to gather reliable nation-wide statistics.

The second method is to give the old, horrific punishment a new, unobjectionable name. Make the torture sound friendly, with fewer syllables and pleasant language. This way, even when abuse is discovered, it appears well-intentioned and humane.

So American prisons rarely punish children with prolonged solitary confinement. Instead, they administer seclusion and protective custody. Prison authorities don’t have to admit that “administrative segregation” is used to discipline children. Just the opposite, actually. It’s all being done “for their own protection.”

September 21, 2013

Big government – “smart guys rob taxpayers because that’s where the big money is”

Filed under: Bureaucracy, Government, USA — Tags: , , , , — Nicholas @ 11:18

Mark Steyn on the quick route to banana republic status:

As the old saying goes, bank robbers rob banks because that’s where the money is. But the smart guys rob taxpayers because that’s where the big money is. According to the Census Bureau’s latest “American Community Survey,” from 2000-12, the nation’s median household income dropped 6.6 percent. Yet, in the District of Columbia median household income rose 23.3 percent. According to a 2010 survey, seven of the nation’s 10 wealthiest counties are in the Washington commuter belt. Many capital cities have prosperous suburbs — London, Paris, Rome — because those cities are also the capitals of enterprise, finance, and showbiz. But Washington does nothing but government, and it gets richer even as Americans get poorer. That’s very banana republic, too: Proximity to state power is now the best way to make money. Once upon a time, Americans found fast-running brooks and there built mills to access the water that kept the wheels turning. But today the ambitious man finds a big money-no-object bureaucracy that likes to splash the cash around and there builds his lobbying group or consultancy or social media optimization strategy group.

The CEO of Panera Bread, as some kind of do-gooder awareness-raising shtick, is currently attempting to live on food stamps, and not finding it easy. But being dependent on government handouts isn’t supposed to be easy. Instead of trying life at the bottom, why doesn’t he try life in the middle? In 2012, the top 10 percent were taking home 50.4 percent of the nation’s income. That’s an all-time record, beating out the 49 percent they were taking just before the 1929 market crash. With government redistributing more money than ever before, we’ve mysteriously wound up with greater income inequality than ever before. Across the country, “middle-class” Americans have accumulated a trillion dollars in college debt in order to live a less-comfortable life than their high school-educated parents and grandparents did in the Fifties and Sixties. That’s banana republic, too: no middle class, but only a government elite and its cronies, and a big dysfunctional mass underneath, with very little social mobility between the two.

Like to change that? Maybe advocate for less government spending? Hey, Lois Lerner’s IRS has got an audit with your name on it. The tax collectors of the United States treat you differently according to your political beliefs. That’s pure banana republic, but no one seems to mind very much. This week it emerged that senior Treasury officials, up to and including Turbotax Timmy Geithner, knew what was going on at least as early as spring 2012. But no one seems to mind very much. In the words of an insouciant headline writer at Government Executive, “the magazine for senior federal bureaucrats” (seriously), back in May:

“The Vast Majority of IRS Employees Aren’t Corrupt”

So, if the vast majority aren’t, what proportion is corrupt? Thirty-eight percent? Thirty-three? Twenty-seven? And that’s the good news? The IRS is not only institutionally corrupt; it’s corrupt in the service of one political party. That’s Banana Republic 101.

July 8, 2013

No matter who you vote for, the Ruling Party always gets in

Filed under: Britain, Politics — Tags: , , — Nicholas @ 00:01

Charles Stross has himself a theory on politics:

I’m nursing a pet theory. Which is that there are actually four main political parties in Westminster: the Conservatives, Labour, the Liberal Democrats, and the Ruling Party.

The Ruling Party is a meta-party; it has members in all of the three major parties, and probably the minority parties as well. It always wins every election, because whichever party wins (or participates in a coalition) is led in Parliament by members of the Ruling Party, who have more in common with each other than with the back bench dinosaurs who form the rump of their notional party. One does not rise to Front Bench rank in any of the major parties unless one is a paid-up Ruling Party member, who meets with the approval of the Ruling Party members one will have to work with. Outsiders are excluded or marginalized, as are followers of the ideology to which the nominal party adheres.

Your typical Ruling Party representative attended a private school, studied Politics, Philosophy and Economics at Oxford (or perhaps Economics or Political Science at the LSE). If they took the Eton/PPE route they almost certainly joined the Oxford debating society. Alternatively they might be a barrister (a type of lawyer specializing in advocacy before a judge, rather than in back-office work).

The Ruling Party doesn’t represent the general electorate, but a special electorate: the Alien Invaders and their symbiotes, the consultants and contractors and think-tank intellectuals who smooth the path to acquisition of government contracts or outsourcing arrangements — the government being the consumer of last resort in late phase consumer capitalism — arrangements which are supported and made profitable by government subsidies extracted from taxpayer revenue and long-term bonds. The Ruling Party is under no pressure to conform to the expectations of the general electorate because whoever the electors vote for, representatives of the Ruling Party will win; the only question is which representatives, which is why they are at such pains to triangulate on a common core of policies that don’t risk differentiating them in a manner which might render them repugnant to some of the electorate.

It would explain a lot, actually.

July 6, 2013

Ireland’s oil and gas bonanza for the oil companies

Filed under: Europe, Government, Law — Tags: , , , , , — Nicholas @ 09:49

Ireland is thought to have substantial offshore reserves of oil and natural gas that are likely to be profitable with current technology, but due to a legislative change dating back to the 1980s, the Irish government may not get much benefit:

In a now legendary all-night sitting on September 29th, 2008 the Irish government agreed to guarantee all bank debts. O’Toole calls this the “most disastrous decision that was ever made by an Irish government”. At least two generations of taxpayers will pay off these debts. O’Toole makes an excellent job of charting the Irish path to disaster in his book Ship of Fools, in which he calls the accounts of Anglo Irish Bank the “most inventive work of Irish fiction since Ulysses”.

The oil off the Irish coast could be the way out of this misery. The oil could be the hope. If the former energy minister Ray Burke hadn’t rewritten the relevant laws as though the oil industry itself held the pen. And if Bertie Ahern hadn’t made an already bad deal for the Irish people even worse.

Burke was energy minister in 1987, when it was decided to change the provisions for oil and grass drilling licence allocation. Until then the state owned 50 per cent of all oil and gas found in Irish waters. In addition, companies had to pay royalties of between 8 and 16 per cent as well as 50 per cent tax. (1, see notes below)

The new rule gave companies 100 per cent of their find and abolished licence fees. In 1992 Bertie Ahern, then finance minister and later prime minister from 1998 to 2008, cut the tax for oil companies to 25 per cent — a provision that remains to this day. (2)

[. . .]

The reason this political inheritance is causing such animated discussion now is because of huge oil and gas reserves believed to surround the island. The company Providence estimates the volume of oil it discovered in the Barryroe field, south of Cork, at over 1.7 billion barrels, of which at least 270 million can be pumped. Further test drillings in Irish waters have been similarly promising.

At the moment a barrel of oil costs, depending on grade, between $90 and $100, meaning there could be oil worth many billions of euro in the Irish sea bed. (3) Even the oil companies concede that Ireland is surrounded by massive riches. But the Irish will probably gain none of this thanks to men like Ray Burke and Bertie Ahern.

July 4, 2013

“Buenos Aires […] is the headquarters for the central planning bad idea bus”

Filed under: Americas, Economics, Government — Tags: , , , , , — Nicholas @ 08:32

At the Sovereign Man blog, Simon Black discusses Argentina’s sad history of central planning failures:

The more interesting part about Buenos Aires, though, is that this place is the headquarters for the central planning bad idea bus.

Argentina’s President, Cristina Fernandez, continues to tighten her stranglehold over the nation’s economy and society.

This country is so abundant with natural resources, it should be immensely wealthy. And it was. At the turn of the 20th century, Argentina was one of the richest countries in the world.

Yet rather than adopting the market-oriented approaches taken by, say, Colombia and Chile, Argentina is following the model of Venezuela.

Cristina rules by decree here; there is very little legislative power. She may as well start wearing a crown.

Just in the last few years, she’s imposed capital controls. Media controls. Price controls. Export controls.

She’s seized pension funds. She fired a central banker who didn’t bend to her ‘print more money’ directives. She even filed criminal charges against economists who publish credible inflation figures, as opposed to the lies that her government releases.

Inflation here is completely out of control. The government figures say 10%, but the street level is several times that.

[. . .]

Being here in this laboratory of central planning makes a few things abundantly clear:

1) Printing money does not create wealth. If it did, Argentina would be one of the richest places in the world again.

2) All of these policies that are ‘for the benefit of the people’ almost universally and up screwing the people they claim to help.

Printing money creates nasty inflation. If you’re wealthy, it leads to asset bubbles, which can make you even wealthier. If you’re poor, you just get crushed by rising prices. Or worse – shortages (remember the recent Venezuelan toilet paper crisis?)

3) Desperation leads to even more desperation. The worse things get, the tighter government controls become… which makes things even worse. It’s a classic negative feedback loop.

Both the United States and pan-European governments are varying degrees of this model, with only a flimsy layer of international credibility separating them from the regime of Cristina.

So Argentina is really a perfect case study in things to come.

June 27, 2013

Bulgarian protests now into second week

Filed under: Europe — Tags: , , , , — Nicholas @ 08:08

In the Guardian, John O’Brennan brings us up to date on the much less reported-on protests in Bulgaria:

Bulgarians are protesting against far-reaching and systematic corruption and the “capture” of the state by rent-seeking oligarchic networks. Oresharski was appointed by the BSP to head a so-called “expert” government, after a general election in April produced a tight outcome. The technocratic government came about because the leading figures within the two largest political parties, the BSP and the centre-right Gerb (Citizens for European Development of Bulgaria) were widely discredited. And although the prime minister has now withdrawn the appointment of Peevski, for protesters the episode suggested that even respected figures like Oresharski are incapable of shaking off the shadowy world of oligarchic power in Bulgaria.

In Bulgaria it is often impossible to know where organised crime ends and legitimate business begins. The nexus between the two is characterised by complex bureaucratic structures, opaque corporate accounting and a maze of offshore accounts. In Varna, Bulgaria’s third largest city, the protests have taken direct aim at TIM, a business conglomerate allied to Gerb and long the real power in the region. Some estimates suggest that it controls up to 70% of Varna’s economy, including most of the tourist infrastructure. When protesters in Varna yell “M-A-F-I-A” they are automatically collapsing business into politics and implicating local municipal officials as the agents of this powerful oligarchic network.

Varna perfectly illustrates why the current protests are largely non-party-political and anti-politics in tone: the definitive division in today’s Bulgaria is no longer between right and left, but between the citizens and the mafia. This is a world where the guilty don’t just go unpunished; they ascend to the highest citadels of power.

Although corruption and the abuse of power are the central themes of this protest, economic hardship also plays a role. New data from the EU demonstrates that Bulgarians have the lowest standard of living in the European Union, at around 50% of the EU average. Even Croatia, which will accede to the EU on 1 July, is significantly more prosperous than Bulgaria.

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