Quotulatiousness

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.

May 31, 2013

Reason.tv: What Game of Thrones teaches about crony capitalism

Filed under: Books, Economics, History, Media — Tags: , , , , — Nicholas @ 00:01

“The game of thrones in general is a game of cronyism because it’s all about forming political alliances, especially with people who can make you better off economically speaking,” says Auburn University Economics Instructor Matthew McCaffrey.

McCaffrey has recently written about the economics involved in the popular Game of Thrones novels by George R.R. Martin as well as the HBO series based on the books. He sat down with ReasonTV’s Tracy Oppenheimer to discuss the various economic concepts that develop alongside the character-driven plot line, such as sin taxes, coin clipping, and the ever-present cost of borrowing.

According to McCaffrey, Martin extensively researches historical economic systems to make “the Realm” as plausible as possible.

“As part of his process he ends up uncovering a lot of historical details that usually get lost in a fantasy book of this kind,” says McCaffrey, “just practical difficulties of running a kingdom, how public finance works, how the game of thrones corrupts the people who play it and how it ends disastrously for the people who don’t play it well.”

May 26, 2013

Bangladesh needs legal reform and free markets

Filed under: Asia, Bureaucracy, Economics, Law — Tags: , , , , , , — Nicholas @ 10:37

Sheldon Richman discusses the plight of workers — especially poor women workers — in Bangladesh:

According to a report written for the Netherlands ministry of foreign affairs, most Bangladeshis, unsurprisingly, are victimized by a land system that has long benefited the rural and urban elites. “Land-grabbing of both rural and urban land by domestic actors is a problem in Bangladesh,” the report states.

    Wealthy and influential people have encroached on public lands…, often with help of officials in land-administration and management departments. Among other examples, hundreds of housing companies in urban areas have started to demarcate their project area using pillars and signboard before receiving titles. They use local musclemen with guns and occupy local administrations, including the police. Most of the time, land owners feel obliged to sell their productive resources to the companies at a price inferior to market value. Civil servants within the government support these companies and receive some plot of land in exchange.

Women suffer most because of the patriarchy supported by the political system. “Women in Bangladesh rarely have equal property rights and rarely hold title to land,” the report notes. “Social and customary practices effectively exclude women from direct access to land.” As a result,

    Many of the rural poor in Bangladesh are landless, have only small plots of land, are depending on tenancy, or sharecropping. Moreover, tenure insecurity is high due to outdated and unfair laws and policies…. These growing rural inequalities and instability also generate migration to towns, increasing the rates of urban poverty.

Much as in Britain after the Enclosures, urban migration swells the ranks of workers, allowing employers to take advantage of them. Since Bangladesh does not have a free-market economy, starting a business is mired in regulatory red tape — and worse, such as “intellectual property” law — that benefit the elite while stifling the chance for poor individuals to find alternatives to factory work. (The owner of the Savar factory, Mohammed Sohel Rana, got rich in a system where, the Guardian writes, “politics and business are closely connected, corruption is rife, and the gap between rich and poor continues to grow.”) Moreover, until the factory collapse, garment workers could not organize without employer permission.

Crony capitalism deprives Bangladeshis of property rights, freedom of exchange, and therefore work options. The people need neither the corporatist status quo nor Western condescension. They need radical land reform and freed markets.

May 19, 2013

Top Three Common Myths of Capitalism

Filed under: Business, Economics, Liberty, USA — Tags: , , , , — Nicholas @ 09:09

Is being pro-business and pro-capitalism the same? Does capitalism generate an unfair distribution of income? Was capitalism responsible for the most recent financial crisis? Dr. Jeffrey Miron at Harvard answers these questions by exposing three common myths of capitalism.

May 13, 2013

Ontario’s other quasi-monopoly, The Beer Store

Filed under: Business, Cancon, Government — Tags: , , , — Nicholas @ 09:16

Anthony Matijas discusses the privately owned organization that controls the majority of beer sales in Ontario:

The Beer Store’s employees will not be going on strike because they are not public sector employees. That may seem obvious to some, but according to an independent survey cited by a government report, 60% of people in Ontario believe The Beer Store to be a state-run entity. No doubt they benefit from the confusion, which may placate customers wondering why they pay so much more for beer than districts such as Quebec and New York state, where beer is sold in corner stores. The Beer Store fosters this ambiguity by designing their stores to be about as welcoming as a Service Ontario outlet.

In fact, the retailer is co-owned by three of Canada’s largest brewers, Molson, Labatt’s, and Sleeman, none of which are entirely Canadian companies. Molson merged with Coors of Denver in 2005, Labatt’s is owned by Anheuser-Busch InBev of Belgium, and Sleeman is owned by Sapporo of Japan. Aside from the LCBO, which enjoys a far more modest market share and generally does not supply restaurants and bars — and microbreweries, which are allowed to sell retail beer only on premises — The Beer Store maintains a government-protected monopoly.

[. . .]

Meanwhile, brewers who aren’t part of the beer cartel must pay what they describe as exorbitant listing prices to have their products placed in Beer Store locations and, once they do, their visibility is generally limited to a coaster-sized listing on the wall, often nowhere near eye-level. Anyone who doesn’t live next door to a Beer Store is likely to pass several billboards for multinational swill on the way and, not frequenting an LCBO, one may not be aware of the many local craft beers available. Those who are near-sighted, and have forgotten their corrective eyewear, may just end up walking out of there with a two-four of Coors Light and a sad look in their eyes.

Revoking Beer Store exceptionalism should be a matter all Ontarians could agree upon, regardless of ideology. A state sponsored monopoly defies the free-market principles of conservatives, while special privileges for multinational corporations should not sit well with supporters of either one of the left-of-centre parties. Furthermore, the largely foreign ownership of Canada’s big breweries means that The Beer Store in no way compliments the economic nationalist tendencies of the NDP.

May 2, 2013

Canada’s Arctic patrol ship design program just a job creation scheme that doesn’t actually create jobs in Canada

Filed under: Cancon, Economics, Military — Tags: , , , , , — Nicholas @ 16:58

The CBC’s Terry Milewski on the Harper government’s much-heralded shipbuilding program which is far more expensive than it needs to be — because of the demand that the work be done in Canada — and yet somehow doesn’t even manage to create Canadian jobs:

Public Works Minister Rona Ambrose and Defence Minister Peter MacKay announced March 7 in Halifax that Ottawa will pay Irving Shipbuilding $288 million just to design — not build — a fleet of new Arctic offshore patrol ships.

Irving will then build the ships under a separate contract.

However, a survey of similar patrol ships bought by other countries shows they paid a fraction of that $288 million to actually build the ships — and paid less than a tenth as much for the design.

In addition, the design of Canada’s new ships is based upon a Norwegian vessel whose design Ottawa has already bought for just $5 million.

The Norwegian ship, the Svalbard, was designed and built for less than $100 million in 2002.

Experts say the design price is normally 10-20 per cent of the total cost of the ships.

But don’t worry … jobs are being created or saved by this major Canadian government project … in Denmark and in the United States:

Another criticism of the project is that much of the design work — in a project meant to create Canadian jobs — is actually going overseas.

Although Irving will manage the design project in Nova Scotia, it has subcontracted the actual production of final blueprints to a Danish firm, OMT. Seventy Danish ship architects will work on those.

The job of designing the systems integration is going to Lockheed Martin and the propulsion system will be designed by General Electric, both U.S. companies.

This is only to be expected, say supporters of the project.

“We’ve been dormant here for better than two decades now. We don’t have the skill sets inside the industry,” said Ken Hansen, editor of the Canadian Naval Review in Dartmouth, N.S.

May 1, 2013

A quick primer on crony capitalism

Filed under: Business, Government, Politics, USA — Tags: , , , , , — Nicholas @ 09:58

In The Atlantic, Timothy P. Carney gives us a thumbnail sketch of the rise and rise of crony capitalism in the United States since 2004:

The 2005 and 2007 energy bills required drivers to buy ethanol, created a government loan-guarantee program for private sector green-energy projects, and effectively outlawed the traditional incandescent light bulb. Ethanol and the green-energy finance programs are pretty naked corporate welfare. General Electric and the light-bulb industry lobby supported the light-bulb law, which forces consumers to buy higher-profit-margin high-tech bulbs.

Then, 2008 saw an avalanche of corporate bailouts: Bear Stearns, AIG, Fannie Mae and Freddie Mac. Then the TARP bailed out all of Wall Street, and later General Motors and Chrysler.

Obama came to power in 2009 and signed an $800 billion stimulus bill supported by the Chamber of Commerce and loaded with goodies for the likes of Google and Solyndra. Obama pushed cap-and-trade with the support of the U.S. Climate Action Partnership, a corporate coalition led by GE, which had set up a business to create and trade greenhouse-gas credits.

In June 2009, Obama signed the Family Smoking Prevention and Tobacco Control Act, a regulatory measure that Philip Morris supported and reportedly helped write — smaller competitors called it the “Marlboro Monopoly Act.” That same month, Wal-Mart, the country’s largest private-sector employer, publicly endorsed the employer mandate in health insurance that became part of Obamacare. The drug lobby wrote significant parts of Obamacare, and the hospital lobby liked the bill enough to file an amicus curiae brief with the Court defending the law from its challenge by states and the small business lobby.

Boeing and the Chamber of Commerce launched a full-court lobbying push in 2011 to save and expand the Export-Import Bank, the government agency Obama loves using to subsidize U.S. Exports — including lots of Boeing jets. In a lesser-known case of regulatory profiteering, Obama hired H&R Block’s CEO to a top position at the IRS, where he crafted new regulations on tax preparers — rules which H&R Block supported and small tax preparers sued to overturn.

April 17, 2013

New frontier in crony capitalism – public-policy profiteering

Filed under: Business, Economics, Government, Technology — Tags: , , , , — Nicholas @ 08:47

Timothy Carney explains why the big companies that made ordinary incandescent lightbulbs were among the groups pushing to make those lightbulbs effectively illegal. It’s a classic case of using government power to reduce competition and increase profit margins for certain companies:

Absent barriers to entry, light-bulb profit margins had to stay low. GE could make superior bulbs — soft white, etc. — but people are only willing to pay so much of a premium for those. After all, we’re dealing with light here, which is kind of a commodity.

So, where to find barriers to entry? Maybe higher-tech bulbs? LEDs, CFLs, or other bulbs that offer longer life and greater efficiency. GE, Osram, and Sylvania jumped into those high-tech bulbs, got some patents. R&D expenses, higher manufacturing costs, proprietary information — these created barriers to entry and allowed heftier profit margins.

But what if you made a super-efficient long-life bulb — and nobody wanted it? What if you couldn’t convince consumers that these bulbs were good for them? Well, that’s when you thank your lucky stars that you are GE, with the largest lobbying budget of any company in America.

You “heavily back” legislation that will “effectively outlaw … the traditional incandescent light bulb.” Now all consumers are forced to play in the world where you have greater barriers to entry, and thus bigger profit margins.

The negative consequences here aren’t mere Tea Party concerns about “crony capitalism” or, say, freedom of choice. One cost is the erosion of competition. GE in this case has found a way to divorce profit from the delivery of value – and I call it public-policy profiteering.

Sure, these high-tech bulbs have value. But I think consumers, rather than politicians, should be the ones who determine what value they assign to energy efficiency and longevity. So, through government intervention, capitalism starts to resemble the Marxist caricature of capitalism — Big Businesses making profits while denying consumers what they want.

April 16, 2013

The anti-libertarian legacy of Margaret Thatcher

Filed under: Britain, Government, Law, Liberty — Tags: , , , , , , — Nicholas @ 09:31

Sean Gabb explains why Thatcher should not be considered in any way “libertarian”:

She started the transformation of this country into a politically correct police state. Her Government behaved with an almost gloating disregard for constitutional norms. She brought in money laundering laws that have now been extended to a general supervision over our financial dealings. She relaxed the conditions for searches and seizure by the police. She increased the numbers and powers of the police. She weakened trial by jury. She weakened the due process protections of the accused. She gave executive agencies the power to fine and punish without due process. She began the first steps towards total criminalisation of gun possession.

She did not cut government spending. Instead, she allowed the conversion of local government and the lower administration into a system of sinecures for the Enemy Class. She allowed political correctness to take hold in local government. When she did oppose this, it involved giving central government powers of supervision and control useful to a future politically correct government. She extended and tightened the laws constraining free speech about race and immigration.

Her encouragement of enterprise never amounted to more than a liking for big business corporatism. Genuine enterprise was progressively heaped with taxes and regulations that made it hard to do business. Big business, on the other hand, was showered with praise and legal indulgences. Indeed, her privatisation policies were less about introducing competition and choice into public services than in turning public monopolies into corporate monsters pampered by the State with subsidies and favourable regulations — corporate monsters that were expected in return to lavish financial rewards on the political class.

April 4, 2013

Harper Conservatives actually love big government … but on the cheap

Filed under: Cancon, Economics, Government — Tags: , , , , , — Nicholas @ 12:49

Stephen Gordon points out that the “small government” rhetoric from Stephen Harper’s Conservatives is so much hot air:

If asked, the Conservatives will tell you that they favour a smaller government that intervenes sparingly in the functioning of the market, and it’s been pretty well-established that a medium- and long-term goal of the Conservative government has been to reduce the share of Canadian GDP that is taxed and spent by the federal government. But lower taxes and lower levels of spending are not the same thing as a smaller government.

Here are the highlights (sic) of the “Strengthening the Competitiveness of the Manufacturing Sector” section of Chapter 3.2 of the budget plan:

[. . .]

  • $920 million to renew the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) for five years, starting on April 1, 2014. Seriously? A slush fund economic development agency for Southern Ontario?
  • $200 million for a new Advanced Manufacturing Fund in Ontario for five years, starting on April 1, 2014, funded from the renewed FedDev Ontario. More pork to be distributed to firms that enjoy the favour of the government.
  • Building on the success of the National Shipbuilding Procurement Strategy, the Government will better ensure that purchases of military equipment create economic opportunities for Canadians by developing key domestic industrial capabilities to help guide procurement, by promoting export opportunities, and by reforming the current procurement process to improve outcomes. The Conservatives can’t even be bothered to sustain the fiction that government procurement should be aimed at obtaining the best value for the taxpayer. Public money is to be spent where politicians want to see public money being spent.

[. . .]

You don’t need a big government to interfere with markets, or to weaken property rights and the rule of law. The decision to forbid shareholders of Potash Corp from selling their holdings to BHP Billiton didn’t cost the federal government a dime. Nor did instructing banks to not offer lower mortgage rates. And then there’s the example of the government’s preference for the clumsy and heavy hand of regulation over more efficient, market-based approaches to reducing greenhouse gas emissions.

I don’t think it’s quite correct to say that the Conservatives want a smaller government. They seem happy to run a government that is as big and dumb as its predecessors — so long as it’s cheap.

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