Quotulatiousness

December 21, 2011

Redefining the term “isolationist”

Filed under: Media, Military, Politics, USA — Tags: , , , — Nicholas @ 10:34

Jacob Sullum explains that mainstream journalists keep saying that word . . . but it doesn’t mean what they seem to think it means:

Reporters routinely describe Ron Paul’s foreign policy views as “isolationist” because he opposes the promiscuous use of military force. This is like calling him a recluse because he tries to avoid fistfights.

The implicit assumption that violence is the only way to interact with the world reflects the oddly circumscribed nature of foreign policy debates in mainstream American politics. It shows why Paul’s perspective is desperately needed in the campaign for the Republican presidential nomination.

As the Texas congressman has patiently explained many times, he supports international trade, travel, migration, diplomacy, and cultural exchange. Furthermore, he supports military action when it is necessary for national defense — in response to the 9/11 attacks, for example.

The inaccurate “isolationist” label marks Paul as a fringe character whose views can be safely ignored. Given the dire consequences of reckless interventionism, that clearly is not the case.

Update: E.D. Kain at the League of Ordinary Gentlemen examines the historical baggage that Ron Paul brings along as he suddenly becomes a serious threat to the GOP establishment:

I wish Ron Paul didn’t have the newsletter baggage, because it does raise questions about his leadership and integrity. Nor do I see Ron Paul as himself a racist, but rather a participant in what was likely a very dodgy experiment in paleo-libertarianism by Lew Rockwell and Murray Rothbard. Paul may or may not have been aware of what was going out under his byline, but it’s certainly still his byline and his responsibility. And yet…

…I simply can’t shrug off these other issues. I’m not sure what to do (again) at this point, because the simple quantity of pushback I’ve gotten on this issue from people I respect has me seriously questioning — not my motives — but my wisdom.

And Gary Johnson, a candidate whose socially liberal views are far, far more palatable to me, has just announced he’ll seek the Libertarian Party nomination. Now the LP is a third party, and I’ve said before that I don’t do third parties, but Johnson represents all the good things that Paul does without the bad past. The thing I couldn’t do with a clean conscience is vote for Johnson and help ensure the election of say Newt Gingrich or Mitt Romney over Obama. [. . .]

Long story short, y’all have me thinking hard on this one. Like Matt, I look forward to the coming months too. I hope that Paul can keep pushing these issues front and center in the debates and in the race ahead. But I can’t ignore the newsletters or other signs of affiliation with racists which, admittedly, appear to go much deeper than I realized. I was too quick to dismiss mistermix last time around. This is a serious issue and I will need more time to think about it before I can say whether or not I was wrong to endorse the candidate who I view as the most likely to prevent future war and to end or at least curtail the war on drugs and terror.

I don’t think Ron Paul himself is racist. I’m not sure why he would be so cavalier and consistent on so many unpopular issues, but never toss a bone to that crowd in any public appearance. But he has certainly been a poor judge of character.

Update, the second: The Ron Paul investment portfolio, by way of the Wall Street Journal: “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds”

December 12, 2011

Defining crony capitalism

Filed under: Economics, Government, Liberty, Politics — Tags: , , , , , — Nicholas @ 14:51

Bill Frezza explains what crony capitalism is and how it differs from free market capitalism:

If defenders of capitalism hope to win over fair-minded fellow citizens who are honestly upset and confused, we need to define these terms and answer some basic questions. In what ways are Crony Capitalists and Market Capitalists the same and in what ways are they different? What makes the former immoral and the latter virtuous? Why are Crony Capitalists a threat to democracy and prosperity while Market Capitalists are essential to both? How is it that ever larger numbers of Market Capitalists are being corrupted, turning into Crony Capitalists? And what can we do to reverse that trend?

All capitalism is driven by greed — the desire to not only achieve economic security, but to amass pools of capital beyond one’s basic needs. This capital can fuel the kind of conspicuous consumption that offends egalitarians. But it also finances investments in new products and businesses, without which the economy cannot grow. [. . .]

What makes Crony Capitalists different is their willingness to use the coercive powers of government to gain an advantage they could not earn in the market. This can come in the form of regulations that favor them while hindering competitors, laws that restrict entry into their markets, and government-sponsored cartels that fix prices, grant monopolies, or both.

Crony Capitalists are also more than happy to help themselves to money from the public treasury. This can come from wasteful or unnecessary spending programs that turn government into a captive customer, subsidies that flow directly into their coffers, or mandates that force consumers to buy their products.

[. . .]

Beyond these obvious Crony Capitalists lies a slippery slope designed to attract and entrap Market Capitalists: the tax code. By setting nominal corporate tax rates high while marketing tax breaks to specific companies and industries, Congress assures itself a steady stream of campaign contributions from companies looking to lighten their tax load. While there is no shame in reducing one’s tax burden from 35% to a more globally competitive 20%, is it any wonder that people get sore when some extremely profitable corporations manage to get their tax burden down to nearly 0%?

November 20, 2011

In praise of Sir Wilfrid Laurier

Filed under: Cancon, History — Tags: , , , — Nicholas @ 10:22

A conservative senator writes of the greatest Liberal prime minister in Canadian history:

Today, almost 100 years after Laurier’s death, I believe as strongly as my grandfather did that great figures from our history like Sir Wilfrid and Sir John A. should be celebrated and honoured, regardless of party.

Like John A., Laurier had that special touch and talent that makes nation-building possible. He was a visionary leader who built upon the foundations laid by Macdonald and brought Canada into the 20th century with success and a healthy confidence. In a country so divided in the early days — divided by race, religion and geography — the guiding principle and mission of his life was the unity of our nation.

Some have said he was the perfect prime minister — too French sometimes for the English, and too English sometimes for the French. He challenged both main language groups in Canada, while simultaneously opening the door to the settlement of Western Canada by immigrants from Eastern Europe.

Shortly before his death, Laurier addressed a group of youth in Ontario. His words are as inspiring in 2011, 92-years-later, as they were when he first spoke them. Canadians, particularly our youth, would do well recall his advice.

“I shall remind you that already many problems rise before you: Problems of race division, problems of creed differences, problems of economic conflict, problems of national duty and national aspiration,” Laurier said. “Let me tell you that for the solution of these problems you have a safe guide, an unfailing light if you remember that faith is better than doubt and love is better than hate. Let your aim and purpose, in good report or ill, in victory or defeat, be so to live, so to strive, so to serve as to do your part to raise even higher the standard of life and living.”

September 28, 2011

Economics on one foot

Filed under: Economics, Government, Liberty — Tags: — Nicholas @ 00:03

September 16, 2011

Ontario’s clean energy Potemkin village

Filed under: Cancon, Economics, Politics, Technology — Tags: , , , , , , — Nicholas @ 10:50

John Ivison reports on a recent photo op by Premier Dalton McGuinty:

The solar energy company touted this week by Ontario Premier Dalton McGuinty as a flagship of the province’s clean energy economy has halted production because of slow demand.

Mr. McGuinty was flanked by Eclipsall Energy Corp.’s workforce when he visited its Scarborough solar panel plant Tuesday, but there was no mention that the production line is temporarily shut down. When my colleague Tamsin McMahon visited the plant she found the reception desk was empty, the cafeteria was closed and only a handful of employees milling around inside the sparsely furnished building.

Leo Mednik, Eclipsall’s chief financial officer, said the production line halt is because the company has already completed its current order book. “It’s no secret that the market is slow and there have been delays. That’s part of it — part of it is logistics. Our production team went through our purchased inventory a lot quicker than expected,” he said.

Not only is the plant not working to capacity: it’s only working at all because of government subsidies:

The Liberal government’s efforts have created jobs — though the 20,000 number touted by Mr. McGuinty seems highly questionable, far less the 50,000 he says will be created by the end of next year. In addition, they are hardly high wage, high skilled jobs the Premier claims (Eclipsall pays 20% over minimum wage to its workers, who assemble glass and solar cells imported from Asia, thereby qualifying for the Liberal Green Energy Act’s 60% domestic content rule).

The question is: how sustainable are these jobs? Mr. Mednik admitted that if the domestic content rule was removed, Eclipsall and other Ontario manufacturers would not be able to survive. “Frankly, it would be very difficult for any start-up to compete” against cheaper Chinese producers, he said.

He said it is a question of when, rather than if, the 60% threshold is removed. Both the European Union and Japan have taken the FIT program to the World Trade Organization and want the local content requirements removed. They claim this Buy Ontario provision is a prohibited subsidy. The FIT program might also soon become subject to a NAFTA dispute case, after American renewable company Mesa Power Group said it would file a complaint.

August 30, 2011

The Canadian economic recovery

Filed under: Cancon, Economics — Tags: , , — Nicholas @ 07:06

David Lee compares the Canadian experience in the most recent recession with that of other nations:

As Republicans and Democrats pushed America further and further to the left and Europe approached ever closer to its socialist ideals, Canada’s political discussion turned from which party could offer the greatest subsidies to the greatest number, to which party’s program of tax cuts would be of more benefit to the economy. For a country where an openly avowed socialist party regularly polls in the top three in provincial and federal elections, this is no small feat. For perhaps the first time in its history, Canada finds itself at the most pro-market limit of the political spectrum among the world’s industrialized nations.

It is not only in this regard that Canada has become an island unto its own. Equally unique to the country is its economic performance subsequent to the financial crisis of 2007 and throughout the ensuing alternations between recession and stagnation that has characterized the experience of the greater part of the developed world since. As the world teeters from crisis to crisis, Canada has proven remarkably resilient in spite of its heavy economic dependence on international trade. Whether there is any significance to the coincidence of these two anomalies will be examined in what is to follow.

By no means is this piece to be taken as an unqualified endorsement of the policies undertaken by the incumbent administration. Despite the overall tenor of the article, this piece could have just as easily been scathing indictment as commendation. The appraisal to be made varies directly with the choice of benchmark. Measured against examples that more closely approximate the free-market ideal such as 1980s-era Hong Kong and Jacksonian America, Canada falls hopelessly short.

August 22, 2011

Jeffrey Miron: Myths about capitalism

Filed under: Economics, Government, Liberty — Tags: , , — Nicholas @ 14:43

July 11, 2011

US economic slowdown and the impact on Canadian exports

Filed under: Cancon, Economics, USA — Tags: — Nicholas @ 10:04

Over at the Globe and Mail, Stephen Gordon debunks the old saw “When the U.S. sneezes, Canada catches cold”:

About 30 per cent of Canadian output is exported, and roughly 75 per cent of exports go to the U.S., which means that some 20-25 per cent of Canadian GDP is exported to the United States. If U.S. demand for Canadian exports were proportional to U.S. income, a 1 per cent decline in U.S. GDP would show up as a 0.2-0.25 per cent decline in Canadian output. (See also here, where I estimate that everything else held constant, a 1 per cent decline in U.S. GDP produces a 0.3 per cent decline in Canadian GDP).

But of course, everything else isn’t held constant when the U.S. goes into recession. For reasons that are not immediately obvious to me, the forex market’s response to a U.S. recession is to produce an appreciation in the U.S. dollar against ours. The resulting depreciation in the Canadian dollar has the effect of increasing net exports. In each of the last three recessions, net exports have provided a positive contribution to Canadian GDP growth.

June 13, 2011

World Bank: smaller governments produce higher economic growth

Filed under: Economics, Government, Liberty — Tags: , , — Nicholas @ 09:33

Tim Worstall summarizes a recent World Bank report that seems to have reached quite sensible conclusions:

Given the level of economic debate currently in the UK the results might surprise. For they support an economic and civil liberalism entirely unlike anything that any political party currently puts forward. This first result is that:

For instance, a one unit change in the initial level of economic freedom between two countries (on a scale of one to 10) is associated with an almost one percentage point differential in their average long-run economic growth rates.

This is unlikely to please those we think of as being on the political left: what, you mean people should just be allowed to get on with things without the direction of a beneficent state? But there’s not that much support for the sort of One Nation Tory paternalism of the other lot either:

In the case of civil and political liberties, the long-term effect is also positive and significant with a differential of 0.3 percentage point.

Yes, people really should be left alone, to shag and to smoke and to live their lives as they please. And finally, it’s going to absolutely appal all of those who insist that it’s the positive freedoms that really produce economic growth:

In contrast, no evidence was found that the initial level of entitlement rights or their change over time had any significant effects on long-term per capita income, except for a negative effect in some specifications of the model.

Income redistribution, high (or low) unemployment pay, child care subsidies, they just don’t make any positive difference to growth but might have negative ones.

In other words, the less your government tries to do outside the basic duties of protecting the citizens from external threats and domestic crime, and providing an honest and transparent set of laws and a stable legal framework, the better off your country will be both economically and socially. Kinda like that minarchistic “night watchman state”.

May 29, 2011

More on the Anglo-Danish Marmite affair

Filed under: Britain, Bureaucracy, Europe, Food, Health — Tags: , , , , — Nicholas @ 10:34

Colby Cosh rounds up the details on the Marmite affair:

Nothing stirs the blood of the British like a nice slapfight over European regulation, and this goes double when food is involved. The UK press has found its latest excuse for tut-tutting and finger-waggling in the unlikeliest of places: at the bottom of the squat, distinctive little jar in which the vile breakfast spread Marmite is sold. This week, English-language journals in Denmark reported that the Scandinavian kingdom’s food regulator was having the dark brown yeast extract cleared from the shelves of shops which serve Brit expatriates.

The British reared up as one, displaying a spirit of indignant unity. “What have the Danes ever done for global cuisine?” thundered the Belfast Telegraph, breaking Godwin’s Law into splinters over its knurled Ultonian knee. (Unfortunately, a good answer might be “Not given it Marmite, at any rate.”) Fans of the quasi-foodstuff gathered on Facebook to form a “Marmite army”. Social campaigners used the ban to call attention to dubious patches in Denmark’s record on human rights and environmentalism.

As he points out, nobody at the Danish food nanny office suddenly issued a ban: technically Marmite had never been cleared for import at all. So it’s just a matter of filling in a form or two and Bob’s your uncle? Not quite:

Marmite’s status as a “fortified food” has apparently only just been noticed, and the DVFA says that “it has not received an application for marketing in Denmark of Marmite or similar products with added vitamins or minerals.” A glance at the DVFA’s procedure for obtaining approval to market these foods reveals why brand owner Unilever might not be in such a hurry to file. (And it also reveals that free-trade fanatics like me should probably rein in their admiration for the EU’s trade barriers just a little.) The agency not only requires compliance with EU-wide regulations, but insists that each product pass an “individual risk assessment” performed using a made-in-Denmark scientific procedure.

May 26, 2011

The Danish Marmite affair thickens

Filed under: Britain, Bureaucracy, Europe, Food, Health — Tags: , , , — Nicholas @ 09:50

Lester Haines has the latest on the plight of ex-pat Brits suffering under a dictatorial food regime in Denmark:

According to this official statement, neither Marmite nor its Oz rival Vegemite are banned in Denmark, because they’ve never actually been approved for sale.

A 2004 law controls the distribution of products with “added vitamins, minerals or other substances”, and in order to punt such foodstuffs, they “need to be approved by the Danish Veterinary and Food Administration before the product can be marketed”.

[. . .]

In effect, then, those shops selling Marmite are dealing in unauthorised enhanced substances.

We and the Daily Mail have no doubt that any attempt to legalise Marmite would be met with a swift rejection, in defiance of EU directives on free trade. As Copenhagen-based expat Lyndsay Jensen put it: “They don’t like it because it’s foreign. But if they want to take my Marmite off me, they’ll have to wrench it from my cold dead hands.”

It’s been said that Marmite is an “acquired taste”, but Denmark’s health regulators are moving quickly to ensure that Danes never have the opportunity to develop that taste. Of course, like most other forms of prohibition, it might actually increase the attractiveness of the “forbidden fruit”.

Denmark has a long coastline, so smuggling in the little black jars across the North Sea would be quite possible . . .

March 10, 2011

Stephen Gordon: “business groups are pro-BUSINESS, not pro-MARKET”

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

Stephen Gordon provides a useful reminder about not conflating “business” interests with “free market” interests: they’re often in conflict.

This is something that should always be kept in mind in economic policy discussions: business groups are pro-BUSINESS, not pro-MARKET.

It is especially important to keep this in mind when we read news items such as this, in which several of Canada’s largest banks voice their opposition to the proposed TMX-LSE merger.

It is true that business groups will often make use the language of markets, and it is obviously in their interest to portray themselves as defenders of markets.

But they are a lobby group like any other, and cannot be relied upon to defend the general public interest.

This point is sometimes hard to see, especially since many business groups have the reputation of favouring such pro-market policies such as free trade. And so they do, but for precisely the wrong reason: as a way of increasing exports.

This is why you can often find big business working hand-in-mailed-gauntlet with regulators to shut down competitors and make it harder for new competitors to enter their markets: corporations do not naturally favour free markets. Corporations exist to maximize profit for their shareholders, not primarily to serve customers. Serving customers is one way to accomplish that end, but in a regulated economy it may not be the best way to do it. If you can get the naked force of government to muscle in and suppress other businesses, that leaves more profit for you (as long as you co-operate with the government, that is).

Small businesses don’t have the ability to cosy up to government in the same way big corporations can, so even if they band together in trade groups, they won’t have the ability to capture and direct the regulators in the way big businesses often can.

March 7, 2011

QotD: Mercantilism

Filed under: Economics, History, Humour, Quotations — Tags: , , — Nicholas @ 09:56

You actually had a short, but interesting chapter in your book explaining why you think our trade balance with China is mostly irrelevant. Could you give people a short, but sweet synopsis of that argument?

Adam Smith was the first to point this out in the Wealth of Nations. The common wisdom at the time, mercantilism was the name it went by, was that the way a nation got rich was by exporting things. In return for the exports they’d get gold. And Smith’s going, I’m paraphrasing broadly here, “You can’t eat gold, you can’t kiss gold, and gold won’t keep you warm at night. Gold is just gold.”

He said the exports, that’s real stuff, and you’re giving it away in favor of gold. He said imports are the good thing. Imports are when you’re getting something you like. You’re getting French wine. You’re getting American tobacco. You’re getting furs from Russia, getting whatever they were getting back in those days. He said exports are the way you pay for those imports. So imports are Christmas morning. Exports are January’s Visa bill.

People getting so upset because everything seems to be made in China — I understand it on the level of the jobs have moved overseas. I think it’s probably an important thing to remember that if the jobs hadn’t moved overseas, they probably would have just gone away. So, it’s not like the Japanese have all of our car making jobs.

John Hawkins, “The P.J. O’Rourke Interview”, Grendel Report, 2010-10-11

March 2, 2011

Why “Buy American” or “Buy Canadian” campaigns are bad economics

Filed under: Economics, History, Liberty, USA — Tags: , , , , , — Nicholas @ 12:26

Daniel Ikenson takes ABC to task for their misleading propaganda against international trade:

Back in the “golden age” of 1960, when imports were oddities to marvel over in a disdainful way, the per-capita U.S. income was $2,914. In 2009, with imports ubiquitous, per-capita income was $46,411. (Economic Report of the President, 2010, Tables B-1 and B-34). In real, inflation-adjusted terms, even with a U.S. population increase from 181 million to 307 million, per-capita incomes in 2009 were almost triple what they were in 1960 ($42,277 vs. $15,669 in 2005 dollars — ERP, 2010, Tables B-2 and B-34). Oh, if only we could replicate the relative poverty, the limited consumer choices, the inefficient production processes, the massive trade barriers that compelled Americans to buy American, and the uneconomic work rules and wages commanded by once-powerful private sector labor unions. In 1960, before real economic liberalization spawned cultural and social liberalization, Diane Sawyer would never have dreamed of being a network news anchor, if she even dared to entertain the concept of working outside of the home. How can she pine for such an era?

It’s frustrating that so much research refuting the myth of manufacturing decline and supporting the conclusion that U.S. manufacturing is thriving — and is in fact leading the world in terms of value of output — is simply neglected by a media that is more committed to scaring than informing. Today Americans are less likely to find in their homes products manufactured in the United States because U.S. manufacturers have moved on to producing higher value products. American manufacturing isn’t focused on products that consumers find in retail stores, like furniture, hand tools, sporting goods, flatware, draperies, carpeting and clothes. American factories produce more value than any other country’s factories by focusing on producing the highest value products: pharmaceuticals, chemicals, airplanes, sophisticated componentry, technical textiles, and other items often sold directly to other businesses.

I and others have been making these points for several years, as U.S. manufacturing continues to thrive in every metric . . . except employment. Manufacturing employment peaked in 1979 and has been on a downward trajectory ever since. But that is the point that eludes ABC and everyone else who thinks U.S. manufacturing’s best days are in the past. Making more with less is the goal! That’s how an economy grows! The political imperative of “putting people back to work” regardless of the economic value of that work — remember the so-called stimulus? — spits in the face of economics. The fact that Americans are unemployed speaks to a mismatch of skills demanded and skills available, as well as to a business and regulatory environment that dissuades investment and hiring.

February 11, 2011

How “those evil speculators” actually provide a very useful public service

Filed under: Economics, Food, History, Liberty, Politics — Tags: , , — Nicholas @ 07:59

Tim Worstall has a very good summary of Adam Smith’s explanation of the very useful public service provided by speculators:

Back to food: this is exactly the argument that Adam Smith put forward to explain the activities of a wheat merchant (Wealth of Nations, Book IV, Chapter V, start at para 40, here, for a decent dose of 18th century prose). When wheat is plentiful (although he calls it corn — the English did not call maize corn until some time later), say after a harvest, the merchant buys it up and stores it. He then waits until prices have risen before he sells it. If his expected shortage in the future doesn’t arrive then he’s shit out of luck and loses money. If it does, then the happy populace now have wheat to eat. For, and here’s the crucial point: what our merchant, our speculator, has done is move prices through time.

If we all ate wheat like it was that bounteous time just after harvest all the time then we would run out of wheat entirely before the next harvest. Prices would, at that point, become really rather high. However, by buying in the time of plenty, he’s raised prices in that time of plenty: thus making everyone consume a little less in that Harvest Festival gluttony. He’s also lowered prices in the Hungry Time (in medieval times, the six weeks before the harvest was indeed known as this, it was the worst time of year for food supplies) because he has at least some grain available rather than none.

So we’ve reduced price volatility, stretched the available supply over more time, possibly even stopped some starvation, by someone being enough of a bastard to speculate on food prices.

Now note, this is physical speculation, actual purchase, taking delivery and storage.

Derivatives speculation, using futures and options, has less effect on prices. It gives us information about what people think prices might be in the future, for sure, but it will only affect today’s prices if high future prices lead to that actual physical storage and hoarding. Which could happen, to be sure, but won’t necessarily.

All of this leads us to what people like M Sarkozy are trying to say and what the WDM are screaming about. The latter, in their report linked above, come right out and say that as more people are playing with food derivatives, this is what has been pushing up food prices. This is nonsensical, in the absence of any physical hoarding. For a start, WDM seems not to realise than a futures market is zero sum: for any profit made by someone then someone else must have made an equal and opposite loss. For everyone going long (betting on a price rise) someone else must have made an equal and opposite bet going short (betting that prices will fall). That’s just how these markets are. It really doesn’t matter to spot (current) prices whether three people are betting £50 or 30,000 are betting $50bn: there will be an equal and opposite number of people long as there are short, by definition.

So it absolutely cannot be that “more people speculating increases food prices”.

WDM’s second point is that more speculation means more volatility in prices: something that almost all economists would regard with a very jaundiced eye. For the general assumption is that futures act upon prices as does Smith’s wheat merchant: they reduce price volatility. Fortunately, the WDM, in its own report, provide us with an example of this. In the 2006/8 price rises, it notes that there’s a deep and liquid speculative market for wheat and corn (maize), while there’s only a very thin one for rice. And yet it was rice that was vastly more volatile in price in this period: despite the fact that it was wheat and maize which people were turning into ethanol for cars (the true cause of the price rises) rather than rice.

The price of a good is also a signal of availability: the more scarce the item is, the higher the price will go. The higher the price goes, the greater the incentive to either limit the use of the item or to search for substitute goods. This is a key feature of free markets: without the price change signalling, consumers cannot accurately guage whether to increase or decrease their use of a particular good. This is why the worst possible reaction to a sudden price increase is price controls: remember the first oil crisis in the 1970s? Price controls meant that people could still buy gasoline at the “old” price . . . until there wasn’t enough to go around. Controlling the price creates artificial shortages and fails to rationally indicate to consumers to conserve or limit their consumption.

« Newer Posts — Older Posts »

Powered by WordPress